Banking sector has lost its crown to telecommunication sector in market capitalisation for the first time on Dhaka Stock Exchange, as share values of most banks keep falling in last four years.
The telecommunication sector surpassed banking sector in June when the market cap of Grameenphone, the lone listed telecommunication company, exceeded Tk44,000 crore after its share prices crossed Tk300 a share during the period on the DSE, according to the DSE.
Market capitalisation is calculated by multiplying a company’s floating shares by the current market price of one share.
The investment community uses this figure to determine a company’s size, as opposed to sales or total asset figures.
As of January this year, the banking sector market cap stood at Tk41,300 crore, making up 15.78% of total market cap and telecommunication sector accounted for 17.6% or Tk50,600 crore of total market cap.
Now, the share price of Grameenphone is being traded at more than Tk300 a share.
The banking sector comprising 30 banks continued to see its value dipping with stock prices of five banks—Exim Bank, First Security Islami Bank, ICB Islami Bank, National Bank and Premier Bank - falling below their offer value.
“This is because of political instability and partly loan scam that hit banking sector badly,” said Asad Khan, managing director of Prime Finance and Investment Limited.
He said the slowed down investment and rising non-performing loan (NPL) were some of prime concerns of investors over the bank.
“Businesses are suffering. No new investment was made in recent years. Only reason is the restive political situation.”
The bank is now awash with liquidity as demand from entrepreneurs for credit declined over the past several years.
According to Bangladesh Bank, the private sector credit growth rose 13.6% in February, slightly up from 13.3% in January. In recent months, credit growth hovered between 11% and 12%.
The credit growth failed to reach the ceiling set in the monetary stance since December 2013.
“As long as political dust is settled down, nothing will be fixed,” said Khan.
He, however, added despite political turmoil, earning performance of some companies is not bad, which was backed by relaxed improvising by the central bank.
The benchmark index of Dhaka Stock Exchange, DSEX, reached near 4,000-mark threshold after 18 months, as investors continued to release their holdings taking cue from the confrontational politics.
Since October last year, the index lost more than 1,300 points or 25%.