Post-Eid political fears hit stocks

Volume of trade went into the tailspin in one week, as investors preferred to stay sidelines in fears of fresh spell of looming political uncertainty after Ramadan, analysts say.   While the volumes have been on the downward path since the beginning of this week, a much steeper fall has been noticed over the last two sessions, as the latest political development centering on upcoming general elections and verdict of war criminals put a damper on the investor sentiment.     Over the one week, the data shows daily volume of trade at the Dhaka Stock Exchange declined sharply by over 47% to 82m shares and at Chittagong Stock Exchange have witnessed a hefty drop of 40% to 8m shares.   DSE turnover dropped 57% to Tk4.4bn, which was lowest for the first time in six weeks and at CSE it fell more than 51% to Tk351m.   Of the total trade volume in the last one week, financial institutions accounted for 13%, big individual players 35% and, retailers, foreign buyers and dealers remaining 52%, according to the DSE sources.    Big players, including Yakub Group, remained inactive while institutional investors like ICB, Premier Bank, Union Capital and Pubali Bank were on selling mood in early days of the present week. But later, they started buying modestly, said a DSE official.    The benchmark DSE General Index, DGEN, declined more than 11% or 500 points to 4,224. The index was lowest in six weeks.   “The bears returned to the stock market due to fear of looming fresh spell of political instability after Ramadan,” said Asaduzzaman Riyadh, research in-charge at Lanka Bangla Securities.   He said some serious concerns from the political front kept the investors away from the stock market.    Floor brokers said although the early sessions of this week was a bit better apparently on spillover of overnight pent-up demand but later panic-selling gripped the market and there were more sellers than buyers.   IDLC Investment in its analysis said recent developments in the political arena had been working to dive the market further.   Investors were searching for comfort zone, it said.   A fund manager said looming gloomy political scenario ahead of national election, that cannot be and should not be ignored, will continue to keep the pressure intact at the stock markets in the run up to election.   But institutional investors should go for long term investment unlike retailers, which help reduce volatility in the stock market, he said.