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DSE benchmark index sinks to 2.9-year low

  • Published at 01:43 am September 12th, 2019
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Stock market update

DSEX index sheds 75.78 points in a single day

Dhaka stocks crash-landed yesterday with broad index hitting a 33-month low amid panic sale triggered by depressed market outlook.

The country's prime bourse broad index lost 75.79 points on the day. DSE plunged below the 5,000-point mark as panicked sale continued fearing further fall. 

On December 21, 2016, the index fell to 4,924.

The investors’ confidence got a battering, which triggered panic sell-off, amid depressed market outlook. 

Stock investors grappling with volatile financial market, risk-averse investors continued their selling spree on large-cap stocks and falling foreign portfolio investments continued selling their holdings.

The investors have been grappling with prolonged bearish trend at the market, liquidity crisis in the country’s financial sector, and Grameenphone’s tussle with the telecom regulator BTRC. 

At the end of the day, the index closed red at 4933.18 with 1.51% decrease from the previous day. All the large cap sectors showed negative movements. Food and Allied and Pharamaceuticals exhibited least negative movement with 0.46% loss. Fuel and Power exhibited highest negative movement with 3.27% loss. 

A total of 141,825 trades were executed in yesterday's trading session generating a turnover of Tk5,02 crore. At DSE, 37 securities gained price, 288 declined, and 28 remained unchanged.

The port city’s bourse, the Chittagong Stock Exchange, also ended lower with its All Shares Price Index (CAPSI) losing 213 points to close at 15,014 and the Selective Categories Index - CSCX – shedding 132 points to finish at 9,114.

EBL Securities in its daily market commentary said investors’ confidence got shattered, which triggered panic sale amid the depressed market outlook. 

Meanwhile, market turnover increased from last day's session driven by selling pressure. At the end of the day turnover stood at Tk 502 crore which was 23% higher than last trading day.

Share prices of quality stocks such as Grameenphone, British American Tobacco Bangladesh, Square Pharma, United Power and Brac Bank have been falling. 

On the other hand, share prices of fundamentally weak and low cap companies such as Kay & Que, Monno Jute Stafflers, Stylecraft Limited, Northern Jute Manufacturing Co and ICB Islamic Bank Limited kept rising significantly. 

One of the bigger market cap company UPGDCL’s value dropped by 4.6% while GP also fell 0.9% as tension between GP and BTRC took a new turn with GP announcing its legal battle against BTRC over the alleged audit claim, said UCB Capital Management on daily market commentary.

Professor Mizanur Rahman of the Department of Accounting and Information Systems at Dhaka University said the financial institutions were unwilling to invest in the market now as they feared the pressure on them. 

Banks’ asset quality was questionable and their operating cash flow was also very low, which ultimately would create more pressure on future liquidity, he explained.

“All steps taken so far have become ineffective due to a liquidity crisis of financial institutions,” he noted. 

Former chairman of Bangladesh Securities and Exchanges Commission (BSEC) Faruq Ahmed Siddiqi told Dhaka Tribune that lapses in regulatory and enforcement matters led investors to continue their selling spree amid lack of confidence.

“Ensuring transparency in trading is a prerequisite for a stable share market. The regulatory body should look into the matter. Abnormal price rise in shares of some companies is common without any specific reason. The rise in prices of small capital companies is a matter of great concern,” said   Siddiqi.

“Money market has a negative impact on the stock market. Lack of good company also causes continuous fall in the stock values,” he said.  

Former president of Bangladesh Merchant Bankers Association (BMBA) Mohammad A Hafiz told Dhaka Tribune: “The investors are going through a volatile situation amid financial scams, soaring non-performing loans, and poor banking management that dampened their moods. Liquidity crisis in the country’s banks also made local and foreign investors wary of investing in Bangladesh’s capital market."