As dragging political unrest and uncertainty costs stock investors dearly, investors, mostly retail ones, are now looking for exit doors while big players remain cautious.
Since the start of non-stop blockade from January 5, the benchmark index of the Dhaka Stock Exchange, DSEX, suffered a loss of around 250 points or 5% to 4685, plunging nearly five-month low.
Analysts say stock market underlines a major risk and is facing heavy sell-off transactions by jittery individual investors, despite the fact that some corporate earnings results, pouring into the market, appear positive.
Ruling Awami League party and major opposition BNP seem to have waged a war against each other over the national elections, putting everything from business to life into the tailspin, analysts observed.
Demanding a fresh election under a caretaker government system, the BNP-led 20-party alliance has enforced a nationwide non-stop transports blockade, which rolls into 34 days today—the longest ever political programme seen by Independent Bangladesh.
Over the last one month, the volume of trade was hovering around more than Tk200 crore.
It is considered poor taking into account the present market depth and market capitalisation which has eroded more than 5% to Tk3,17,721.7 crore at the DSE.
On January 25, the index witnessed the biggest one-day decline in last one year with plummeting nearly 2%.
“It is the political unrest which pushes down investor confidence to the brink,” said VIPB Asset Management Company chief executive officer Shahidul Islam.
Investment and business are much more sensitive to political uncertainty, whether on the upside or the downside, he said adding that the prolonged political turmoil might affect the profitability of individual firms.
“Unless the dust of political unrest settles down, the market will not get back its pulse.”
Retail investors are on selling mood fearing further fall of the market while big players and institutional investors have become almost day traders, market sources said.
But some big players hold back their investments expecting sudden political settlement, they said.
“Situation is very bad, as everyone is jittery about the market that moves one-step forward and two steps backward,” Abul Kahem, an investor at DSE.
He added: “We fail to gauge the market direction. So, it is better to keep myself on the sidelines to save my investment.”
He, however, said some investors opt for buying in dips on expectation of sudden political negotiation, making the market move flat in several sessions.
An analyst said: “There are some companies that corrected well and it’s a good opportunity to dip your toes in – with the perception that if things get worse, it’s a chance to buy even more at lower prices.”
When asked about his expectations for the market, he said, “This is very a hard question to answer as the current political crisis is deepening day by day.”
He advised investors not to be hasty in making decision, adding that it is the perfect timing for institution to buy stocks.
According to recent survey of LankaBangla Securities, 50% respondents held political instability responsible for poor market performance in 2015.