Dhaka stocks on Wednesday dropped for the 11th consecutive session, the longest ever downward spell at the bourse, as investors became puzzled over the continuous fall in share prices despite the BSEC’s approval in favour of a Chinese consortium to be DSE’s strategic partner and the government’s bailout to revive financial sectors.
DSEX, the key index of the Dhaka Stock Exchange, lost 0.66 per cent, or 37.13 points, to close at 5,511.76 points.
The key index lost 302 points in last 11 trading sessions.
During the bubble and bust year 2010-2011, the key index, then named as DGEN, had witnessed steep ups and downs and lost as many as 600 points in a single day on January 9, 2011 but had not fallen for more than eight days at a stretch.
On Wednesday, the market began to fall from the very beginning of the session that remained in the negative trajectory until the end of the session as worried investors kept selling shares, market operators said.
They said investors were puzzled over the relentless market fall despite the fact that the DSE on Monday signed a strategic investment agreement with the Chinese consortium of Shanghai Stock Exchange and Shenzhen Stock Exchange.
An uncertainty over the issue was a key reason for the market fall in February-March, they said.
After finance minister AMA Muhith announced the government measures for financial bailout to increase liquidity on April 1, Dhaka stocks gained the positive momentum.
As per the government steps, Bangladesh Bank cut banks’ cash reserve ratio to 5.5 per cent from 6.5 per cent and allowed state-owned enterprises to deposit up to 50 per cent of their reserve fund with the private commercial banks from previous 25 per cent.
However, the enthusiasm didn’t last for long as the media has been continuously exposing various scams in the banking sector.
A number of surveys conducted by various organisations including international organisations like the United Nations said that Bangladesh’s banking sector had been plagued by financial scams, non-performing loans and poor monitoring, posing a macroeconomic risk.
Because of provisioning against huge amount of defaulted loans, most of the banks recently declared profit fall and lower dividends for the year 2017 that also dampened the investors’ mood.
In addition to that, more than 18 banks disclosed profit fall in the January–March period compared with that in the same period of the previous year.
United International University business and economics professor Mohammad Musa told New Age that the crisis in the financial sectors was playing a major role in the capital market.
There could be a section of investors who deliberately sold shares to buy stocks when the market dropped while another group could outflow fund to gain their interests, he said.
The financial sectors have been leading the continued downfall at the market.
The share prices of banks and non-bank financial institutions declined by 0.77 per cent and 0.07 per cent respectively on Wednesday.
The share prices of telecommunication, cement and pharmaceuticals sectors dropped by 2.23 per cent, 1.02 per cent and 0.53 per cent respectively.
Grameenphone alone moved the index 24 points
down on Wednesday while BRAC Bank and Square Pharmaceuticals also contributed to the dive.
On the other hand, the share prices of energy and food increased on the day.
The turnover at the DSE increased slightly to Tk 394.86 crore on Wednesday compared with that of Tk 355.29 crore in the previous session on heavy share sales.
Of the 335 companies and mutual funds traded on the day, 223 declined, 71 advanced, and 45 remained unchanged.
DS30, the blue-chip index of the DSE, shed 0.79 per cent, or 16.57 points, to finish at 2,055.55 points.
Shariah index DSES slipped by 0.74 per cent, or 9.66 points, to close at 1,291.02 points.
Western Marine Shipyard led the turnover chart for the fourth consecutive session on the day with its shares worth Tk 22.44 crore changing hands.
United Power Generation Company, Bangladesh Steel Re-Rolling Company, Bangladesh Export Import Company, Square Pharmaceuticals, Queen South Textile Mills, Grameenphone, Monno Ceramics, BRAC Bank and Legacy Footwear were the other turnover leaders.
Monno Jute Stafflers gained the most with a 6.24 -per cent increase in its share prices, while Eastland Insurance Company was the worst loser, shedding 9.72 per cent.
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