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Stocks keep sinking despite ADR cut, Kamal’s meeting

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

 
 

Dhaka stocks plunged to a 33-month low on Wednesday on panic selling as the latest government efforts to stabilise the market failed to restore the investors’ confidence.

Market operators said the Bangladesh Bank’s decision to raise the banks’ advance deposit ratio and the finance minister AHM Mustafa Kamal’s meeting with market regulators and stakeholders apparently put no positive impact on the market.

DSEX, the prime index of Dhaka Stock Exchange, lost 0.83 per cent, or 40.96 points, to close at 4,888.01 points on Wednesday after losing 30.74 points in the previous session.

The index hit its lowest after December 12, 2016 when it was at 4,869.59 points.

After a slight gain at the beginning on Wednesday, the market began to fall and descended more firmly as the session progressed amid late hour selling pressure, market operators said.

On Monday, Kamal held a meeting with the market regulators and stakeholders to ensure them that the government would provide all supports for the capital market development.

Market operators said Kamal’s comments after the meeting failed to cheer investors up as they found nothing new and specific in his remarks.

Market regulator Bangladesh Securities and Exchange Commission had also tried to recover the investors’ trust in the market, but to no avail.

Bangladesh Bank on Tuesday raised banks’ ADR, increasing their lending capacity but the move failed to encourage stock market investors, market operators said.

The central bank raised the ADR ratio for conventional banks to 85 per cent from 83.5 per cent, which means that they can now lend 85 per cent of their advance including deposit.

The country’s banking sector has been facing liquidity crisis due to huge non-performing loans.

The financial sector woes and the BSEC’s failure in improving the market condition after the 2010-11 crash have resulted in prolonged bearish trend at the country’s capital market in recent months.

The continued fall in share prices eroded Tk 53,114 crore in market capitalisation in last eight months and Tk 20,000 crore in last 18 trading sessions.

EBL Securities in its daily market commentary said, ‘The prime bourse’s DSEX continued to bleed and settled at a 33-month low in spite of central bank’s declaration to ease ADR at the previous level amid liquidity scenario. News such as BTRC’s severe position towards GP, withdrawal of foreign fund, no prompt solution from finance minister’s meeting kept on lessening investors’ confidence.’

The average share prices of textile sector dropped by 1.7 per cent, telecommunication 1.4 per cent, non-bank financial institution 0.3 per cent and bank 0.1 per cent.

Out of the 352 scrips traded on Wednesday, 214 declined, 97 advanced and 41 remained unchanged.

Turnover on the bourse plunged to Tk 371.53 crore on Wednesday from Tk 435.56 crore in the previous session.

DS30, the blue-chip index of the DSE, slumped by 0.91 per cent, or 15.96 points, to close at 1,735.85 points.

DSE Shariah index DSES shed 1.42 per cent, or 16.34 points, to close at 1,130.63 points.

National Tubes led the turnover chart with its shares worth Tk 20.05 crore changing hands.

Monno Jute Stafflers, Square Pharmaceuticals, Sino Bangla Industries, Legacy Footwear, Stylecraft, JMI Syringe, Fortune Shoes, Global Insurance and United Power Generation Company were the other turnover leaders.

Global Insurance Company gained the most on the day with an 8.86-per cent increase in its share prices while Monno Ceramic Industries was the worst loser, shedding 9.05 per cent.

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