Stocks bloodbath as Muhith ‘sides’ with BSEC over regulator-DSE tussle

Staff Correspondent | Published: 21:27, Mar 13,2018 | Updated: 23:59, Mar 13,2018

 
 

Dhaka stocks plummeted for the third day on Tuesday as investors continued panic selling as finance minister AMA Muhith apparently sided with the market regulator by criticising the Dhaka Stock Exchange for its role in the ongoing tussle between the bourse and the regulator over the strategic partner selection.
The DSE’s key index, DSEX, lost 1.43 per cent, or 81.92 points, to finish at 5,623.64 points, a nine-month low.
The index lost 204.33 points in last three sessions because of fresh uncertainties surrounding the sales of shares of the DSE to a Chinese consortium to make it a strategic partner and worries over a liquidity crisis at the financial market.
The market capitalization lost Tk 10,571 crore in the last three day’s plunge.
Market operators said that the sell-offs intensified on Tuesday after the previous two days’ rout as Muhith on Monday afternoon criticised the role of the DSE in the present market condition.
‘Regarding the capital market, some are trying to catch fish in troubled waters. The DSE’s role at this moment is not right,’ he said at a pre-budget discussion with economists at the National Economic Council in the capital.
He said though Bangladesh Bank relaxed the timeframe for banks to bring down the advance-deposit ratio from June to December this year, there was no reflection of the message in the market because of the DSE’s role.
Muhith also told reporters that the DSE did not pay any heed to anyone, apparently taking a swipe at the DSE board for selecting the Chinese consortium of Shanghai Stock Exchange and Shenzen Stock Exchange as the bourse’s strategic partner.
Former adviser to an interim government Mirza Azizul Islam told New Age that no one should comment on the DSE’s share sales issue before the regulator reaches any decision.
Government high ups, particularly Muhith, and Bangladesh Securities and Exchange Commission’s top brass are not happy about the DSE’s selection of the top bidder, the Chinese consortium, as they wanted the DSE pick the second top bidder, a group led by India’s National Stock Exchange.
Ignoring the BSEC’s initial pressure, the DSE board on February 10 selected the Chinese consortium as it found the consortium’s offer of Tk 22 a share and other technical supports against the NSE-led group’s Tk 15 a share offer and technical support was ‘much better’.
Market initially cheered the DSE’s selection with the key index skyrocketing by 124 points on February 11 but then the uncertainty set in with the media reports that the BSEC had blasted the DSE decision and asked the bourse to select the NSE-led group.
Eventually, the DSE sent its decision to select Chinese consortium to the BSEC for approval, which has remained pending with the regulator.
‘The finance minister’s comments on Monday have given an impression that he sided with the BSEC and that the uncertainty about the selection of the strategic partner by the DSE would linger,’ said a stockbroker.
He said that the capital market had been going through a liquidity shortage for last few weeks because of a rise in the interest rates in the money market. ‘So, many investors are now preferring investment in bank deposits to investment in an uncertain stock market,’ he said.
Besides, the political uncertainty surrounding the sentencing of BNP chairperson Khaleda Zia in an election year was also haunting some investors, especially foreign investors, he said.
The DSEX lost 713 points or 11.25 per cent in two and a half months since November 26, 2017 when it hit record 6,336 points because of political uncertainty, worries over liquidity crisis and BSEC’s interference in selection of DSE’s strategic partner.
On Tuesday, out of the 333 companies and mutual funds traded, 291 declined, just 18 advanced, and 27 remained unchanged.
The share prices of non-bank financial institutions, bank, pharmaceuticals and telecommunication declined by 2.1 per cent, 1.6 per cent, 0.7 per cent and 0.6 per cent respectively that contributed most to the day’s plunge.
Out of the 30 traded bank scrips, the share prices of all the banks declined while out of the 22 traded NBFIs, 19 declined and just four advanced.
The turnover at the bourse also declined to Tk 282.31 crore compared with that of Tk 298.24 crore in the previous session.
DS30, the blue-chip index of the DSE, plunged by 1.03 per cent, or 21.90 points, to close at 2,085.54 points.
Shariah index DSES shed 1.30 per cent, or 17.56 points, to finish at 1,333.19 points.
Queen South Textiles Mills led the turnover chart on the day with its shares worth Tk 18.58 crore changing hands.
Queen South Textile Mills made its debut on the day. Its share prices soared by 236 per cent to finish at Tk 32.50.
Monno Ceramics, Grameenphone, Square Pharmaceuticals, IFAD Autos, Fortune, CVO Petrochemical, Apex Foods, Mercantile Bank and Alif Manufacturing Company were the other turnover leaders.
CAMP IBBL Islamic Mutual Fund was the top gainer with a 3.92-per cent rise in its share prices, while Reliance Insurance was the worst loser, shedding 11.36 per cent.

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