Stocks drop for second week on liquidity crisis

Staff Correspondent | Published: 00:00, May 19,2019

 
 

Dhaka stocks in the past week fell for the second week with poor turnover as investors remained worried about the liquidity shortage in the financial market.
DSEX, the key index of Dhaka Stock Exchange, shed 0.85 per cent, or 45.05 points, over the week to close at 5,230.79 points on Thursday, the last trading session of the week after losing 10.92 points in the previous week.
The core index lost 720 points in the last 16 weeks with just one week of gains.
The market witnessed fall in four trading sessions out of five in the week as investors continued cautious share sales amid concern over the liquidity crisis in the financial sectors, market operators said.
They said that the liquidity crisis was getting worse day by day as the banks, which were plagued with scams and huge bad loans, were struggling to get enough funds from the depositors.
The crisis also affected the capital market.
The government’s initiatives to revive the banking sector went in vain as the banks failed to recover the bad loans from the large loan defaulters.
A huge amount of funds flow to the national savings certificates as they provide lucrative interest and security.
Investors also took cautious stance as the month of Ramadan began and ahead of the national budget when market typically remains slow.
The daily average turnover on DSE plunged to Tk 292.30 crore in the past week from Tk 428.96 crore in the previous week.
EBL Securities in its weekly market review said ‘DSE index has plunged for straight four sessions from Sunday to Wednesday due to reports on liquidity short age in the financial sector.’
‘Typical slow trading in Ramadan along with investors being extra cautious has resulted in the lowest turnover in 14 months in Tuesday,’ it said.
‘Investors took “lie low” stance and were not injecting fresh capital before the budget announcement,’ the brokerage house said.
Average share prices of telecommunication, pharmaceutical, textile and non-bank financial institutions sectors dropped by 2.6 per cent, 2.2 per cent, 1.5 per cent and 0.4 per cent respectively.
On the other hand, some investors went for bargain hunting from the bearish market with an expectation of possible regulatory measures to revive the market.
The market gained in the last session on Thursday following the media reports that the Bangladesh Bank was going to increase banks investment limit in the capital market.
BB issued circular on Thursday day excluding banks’ investment at a number of unlisted securities from banks’ capital market investment exposure calculation.
Therefore, share prices of general insurance, bank and energy sectors advanced by 2.1 per cent, 1.1 per cent and 0.3 per cent respectively.
Out of the 350 issues traded, 195 declined, 122 advanced and 33 remained unchanged.
DS30, the blue-chip index of DSE, dropped 1.79 per cent, or 33.14 points, to close at 1,818.21 points.
Shariah index DSES also declined 1.86 per cent, or 22.74 points, to finish at 1,197.56 points.
Fortune Shoes led the turnover chart with its shares worth Tk 73.34 crore changing hands in the week.
BRAC Bank, Bangladesh Shipping Corporations, Power Grid Bangladesh, Oimex Electrode, Monno Ceramic Industries, Esquire Knit Composite, Square Pharmaceuticals, IFIC Bank and Indo-Bangla Pharmaceuticals were the other turnover leaders.
United Insurance Company gained the most in the week with a 13.93-per cent increase in its share prices while SS Steel was the worst loser, shedding 10.18 per cent.

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