Dhaka stocks crash-landed on Monday with key index hitting a 30-month low as panic-stricken investors continued selling shares over People’s Leasing and Financial Services (PLFS) liquidation move and Grameenphone’s financial declaration.
DSEX, the key index of Dhaka Stock Exchange, plunged by 1.69 per cent, or 88.01 points, to close at 5,091.48 points on Monday. The index on the day hit its lowest in two and a half years since January 1, 2017 when the DSEX was at 5,083.89 points.
The index lost 289 points in last seven consecutive sessions.
In line with the previous day, the market started falling sharply from the beginning of Monday’s session to end the session deep into the negative zone as investors continued selling shares amid worries over the financial market following PLFS liquidation move, market operators said.
The media reported that the High Court on Sunday accepted the prayer of Bangladesh Bank for PLFS’ liquidation for hearing and the court also appointed BB deputy general manager Md Asaduzzaman Khan as provisional liquidator of PLFS.
Market operators said the panic spread across the market as investors feared that some other companies in the financial sector might face the same fate due to their bleak business condition.
The Dhaka Stock Exchange and the Chittagong Stock Exchange suspended trading of the shares of PLFS from Sunday that also weighed on the investors’ sentiment.
Market experts said that the collapse of PLFS exposed the sorry state of the country’s financial sector.
The media on Monday reported that five non-bank financial institutions including PLFS became defaulters as they could not pay back loans to their clients and were struggling to pay depositors’ money.
The four other companies were International Leasing and Financial Services, FAS Finance and Investment, Bangladesh Industrial Finance and Prime Finance.
The shares of the four companies were traded at their lowest possible prices under the circuit breaker on Monday.
Out of the 22 NBFIs traded, share prices of all the companies finished in the negative zone.
Even other financial sector including bank, insurance and mutual also faced sell-offs on the day.
Former adviser to an interim government AB Mirza Azizul Islam told New Age that the budgetary measures could not meet the investors’ expectations; rather the penalty tax imposed on the listed companies would bar the companies from expanding business and reducing dividend giving ability.
Mirza Aziz, also a former Bangladesh Securities and Exchange Commission chairman, said that the liquidation of PLFS might spread panic among investors and the BB and the BSEC should assure the investors not to fear over the possibility of more companies’ liquidation.
The ongoing liquidity crisis in the financial sector could weigh on the market, he said.
The share prices of Grameenphone plunged by 5.84 per cent as investors became disheartened by financial declaration of the company on Monday. The plunge impacted 43 points negative on the DSEX.
The profits of the mobile operator declined by 8 per cent in the April-June period compared with that in the same period of the previous year and the company declared interim cash dividend of 90 per cent, which was lower than the previous year.
Share prices of the leading mobile operator has fallen significantly in last few weeks over its tussle with the Bangladesh Telecommunication Regulatory Authority over Tk 12,500 crore in audit claim.
EBL Securities in its daily market commentary said, ‘Recent liquidation of PLFS and gas price hike have brought down investors’ confidence over the last few days and the trend continued as investors went on selling shares today [Monday].’
Earning declaration by GP has not met the investors’ expectations amidst the ongoing regulatory issues, it said.
A section of investors on Monday took to the streets on Monday amid the continuous fall in share prices.
Affected investors blamed market regulator BSEC for the current situation at the market.
They demanded an immediate resignation of BSEC chairman M Khairul Hossain and overhaul of the commission.
They threatened that if the relentless fall would not stop, investors would go for tougher action.
The DSEX shed 330 points in last 12 sessions and investors lost around Tk 21,000 crore.
The average share prices of all the sectors lost on Monday.
The share prices of telecommunication, NBFI, textile and bank slumped by 5.85 per cent, 2.99 per cent, 2.40 per cent and 0.69 per cent respectively.
Out of the 353 scrips traded on the day, 303 declined, just 37 increased and 12 remained unchanged.
Turnover on the bourse dropped to Tk 306.06 crore on Monday from Tk 354.04 crore in the previous session as investors preferred to be on the sidelines to observe the situation.
DS30, the blue-chip index of DSE, shed 1.87 per cent, or 34.75 points, to close at 1,818.52 points.
DSE’s Shariah index DSES decreased by 2.04 per cent, or 24.38 points, to close at 1,166.36 points.
Grameenphone led the turnover chart with its shares worth Tk 12.32 crore changing hands.
Monno Ceramic Industries, Fortune Shoes, Square Pharmaceuticals, JMI Syringe, United Power Generation Company, Federal Insurance Company, National Life Insurance, Runner Automobiles and Singer Bangladesh were the other turnover leaders.
SEML FBLSL Growth Fund gained the most on the day with a 9.32-per cent increase in its share while Bangladesh Industrial Finance was the worst loser, shedding 10 per cent.
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