Plunging stocks hit 35-month low

Panic spreads as govt remains indifferent to investors’ woes

Staff Correspondent | Published: 00:00, Oct 23,2019

 
 

A section of investors hold a demonstration to protest against the slump in stock prices in front of the Dhaka Stock Exchange building in the capital on Tuesday. — New Age photo

Dhaka stocks kept plunging on Tuesday as the government remained indifferent to the investors’ woes amid their demand for ouster of top brasses of the Bangladesh Securities and Exchange Commission, market operators and experts said.

DSEX, the key index of the Dhaka Stock Exchange, hit a 35-month low on Tuesday amid panic selling as mistrust between the market regulator and the other stakeholders widened, they said.

The DSEX lost 1.10 per cent, or 52.74 points, to end at 4,708.68 points on Tuesday after losing 20.67 points in the previous session.

Tuesday’s index was the lowest after November 17, 2016 when it was at 4,698.54 points.

The DSEX fell by 227 points in last 14 trading sessions with just two positive sessions.

A number of stockbrokers and investors told New Age that investors became more panicky day by day as they found there was no government move to reshuffle the BSEC while BSEC officials claimed that a section of stakeholders intentionally causing market plunge to ‘embarrass’ the commission.

Investors blamed the BSEC, which is led by chairman M Khairul Hossain, for the current market woes for its role in bringing a large number of weak companies to the market.

A section of investors again held a protest rally in front of the DSE building at Motijheel in the capital on Tuesday and demanded an immediate resignation of Khairul and Helal Uddin Nizami, the senior most commissioner of the BSEC.

Investors said that the current commission with Khairul at the helm since 2011 got a long period of time to implement long-term and short-term development ideas in the stock market, but nothing significant was seen in the period that could drastically change the capital market scenario after the debacle in 2010-11.

Former Dhaka University professor Abu Ahmed told New Age that the government should seriously think about bringing changes to the commission as the current commission had got long time.

He said that the BSEC could be partially blamed for the current market situation as they introduced some rules that went against the interest of the general investors. Extension of mutual funds’ tenure was one of them, he said.

Abu Ahmed said, ‘Lack of implementation of rules and regulations, absence of proper enforcement actions against errant people, approving fundamentally weak companies and allowing placement business were the key reasons for the dearth of investors’ confidence in the BSEC.’

The BSEC also failed to bring multinational and government-owned companies to the market, and diversify the capital market, he said.

The tussle between Grameenphone and telecom regulator Bangladesh Telecommunication and Regulatory Commission over an audit claim was once considered one of the key reasons for the rout, but a surge in share prices of the company couldn’t save the market from a big fall on Tuesday. Share prices of Grameenphone gained 1.53 per cent on the day.

The market started falling sharply from the very beginning on Tuesday and maintained the negative run until the end of the session as investors went for panic-driven share sales, market operators said.

They said the market had been falling for nine consecutive months that left investors no option but to withdraw holdings from the share market.

Some of the brokerage house continued conducting forced sales to avoid further erosion in value of their margin loans, they said.

The DSEX plummeted by 1,240 points in the nine months’ rout with Tk 65,200 crore wiped off the DSE market capitalisation.

The Investment Corporation of Bangladesh recently received Tk 200 crore from Sonali Bank and The City Bank received Tk 50 crore from the Bangladesh Bank. State-run ICB and private commercial bank The City Bank would invest the funds in the capital market but the moves failed to change the market situation.

Turnover on the DSE plunged to Tk 288.36 crore on Tuesday from Tk 350.49 crore in the previous session.

Apart from lack of confidence in the regulators, investors have been grappling with a number of issues including rising non-performing loans and liquidity shortage in the country’s financial sector.

The average share prices of textile sector dropped by 3.8 per cent, non-bank financial institution 3.1 per cent, bank 1.0 per cent and pharmaceutical 0.5 per cent on the day.

EBL Securities in its daily market commentary said that lack of confidence in the market amid the ongoing pessimistic sentiment kept investors inactive.

Out of the 352 scrips traded on the day, 292 declined, 30 advanced, and 30 remained unchanged.

Blue-chip index DS30 declined by 0.87 per cent, or 14.60 points, to close at 1,660.88 points.

DSE Shariah index DSES shed 0.78 per cent, or 8.56 points, to end at 1,080.96 points.

National Tubes led the turnover chart with its shares worth Tk 14.35 crore changing hands on the day.

United Power Generation Company, Monno Jute Stafflers, Silco Pharmaceuticals, Eastern Insurance, Renata, Grameenphone, Standard Ceramics, Square Pharmaceuticals and Bangladesh Shipping Corporation were the other turnover leaders.

Golden Harvest Agro Industries gained the most on the day with a 9.32-per cent increase in its share prices while Anlima Yarn Dyeing performed the worst, losing 9.80 per cent.

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