Dhaka stocks drop amid bank sector concerns

Staff Correspondent | Published: 00:05, Jul 10,2018 | Updated: 10:49, Jul 10,2018

 
 

Dhaka stocks declined on Monday after a flat ending in the previous session amid investors’ concern over the banking sector woes following media reports that reduced lending and deposit rates were affecting the sector.
DSEX, the key index of Dhaka Stock Exchange, shed 0.46 per cent, or 24.74 points, to finish at 5,341.27 points. On Sunday, the index added 3.74 points.
The market finished negative due mainly to investors’ increased share sales following media reports that the banking sector was facing problems in implementing reduced lending rate at 9 per cent and deposit rate at 6 per cent, stockbrokers said.
Investors, who previously had expected that the reduction in lending rate in the banks would boost the capital market, became sceptical about its implementation by the banks, they said.
Although the bankers following the announcement made by the Bangladesh Association of Banks on June 20 declared that they would implement the reduced rate for lending from July 1, a very few of them have so far managed to do so.
Besides, bankers and experts are in fear that forced implementation of the BAB decision, against the market force, would ultimately weaken the financial health of the embattled banks.
Media reports said that many of the banks were already facing difficulties to collect deposit after they brought down the deposit rate to 6 per cent.
Turnover on the DSE, however, increased slightly to Tk 901.26 crore on Monday compared with that of Tk 892.49 crore in the previous trading session.
Amid a fall in the prices of large capitalised scrips, the prices of some low capitalised and fundamentally weak companies continued to grow abnormally.
For instance, Legacy footwear was the highest gainer on the day, hitting the upper price limit for the sixth consecutive session, despite the fact that the company informed the DSE that it had no price sensitive information behind the share price movement.
Aziz Pipes, a company with Tk 5.09 crore paid-up capital, again rose by 4.78 per cent to close at Tk 254.60 crore on Monday after a pause on Sunday.
Of the 341 companies and mutual funds traded, 141 advanced, 164 declined and 36 remained unchanged.
DS30, the blue-chip index of the bourse, closed at 1,910.77 points, shedding 0.95 per cent or 18.35 points.
Shariah index DSES, however, inched up by 0.08 per cent, or 1.03 points, to close at 1,268.26 points.
‘The broad index was at peak during the first hour of the trading session but slowed down gradually during the mid-day session,’ said LankaBangla Securities in its market report.
‘Though the index rose a bit later on but could not manage to end positively,’ it said.
This negative change in the index was mainly driven by significant negative movement in the bank, food and allied and real estate sectors, the stockbroker said.
‘All the large cap sectors posted negative movements with a 1.32-per cent loss in the banking sector,’ it said.
BBS Cables led the turnover chart on the day with its shares worth Tk 42.48 crore changing hands.
Bashundhara Paper Mills, Legacy Footwear, Singer Bangladesh, Ratanpur Steel Re-Rolling Mills, Pacific Denims, United Power Generation and Distribution Company, Fortune Shoes, Prime Textile Spinning Mills and Dragon Sweater and Spinning were the other turnover leaders.
Legacy Footwear gained the most on the day with a 9.95-per cent increase in its share prices, while GQ Ball Pen Industries was the worst loser, shedding 7.49 per cent. 

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