Dhaka stocks back in red zone as economic worries take toll

Staff Correspondent | Published: 00:00, Dec 08,2019


Dhaka stocks slumped in the past week as investors were concerned about the gloomy state of the country’s economy.

DSEX, the key index of the Dhaka Stock Exchange, lost 1.27 per cent, or 60.1 points, over the past week to close at 4,671.34 points on the last trading session of the week on Thursday, after gaining 24.77 points in the week before.

The DSEX lost 100 points in the last four weeks with one positive week.

The market witnessed falls in most of the sessions in the past week as investors became concerned about the sudden stagnant condition in some of economic indicators, market operators said.

They said that a continuous fall in the private sector credit growth, negative export earnings growth for the last four months and poor tax revenue collection reflected the gloomy state of the economy.

The private sector credit growth hit a fresh nine year-low of 10.04 per cent in October amid stagnant business conditions.

Export earnings fell for the fourth consecutive month in November of 2019-20, standing at $3.05 billion against $3.42 billion in the corresponding period of FY 2018-19.

Apart from that, the government’s outstanding borrowing from the banking sector increased to Tk 1,41,682.64 crore on October 30 from Tk 1,08,095.7 crore on June 30 this year, that has become a heavy drag on the financial market.

The government has been criticised for its failure to rein in on surge of bad loans as all of its mechanisms have misfired.

Defaulted bank loans swelled to Tk 1,16,288 crore in September after adding Tk 3,863 crore in the July-September period.

Concerns over the country’s economy also prompted foreign investors to continue withdrawing funds for the last nine months. Net foreign investment at the DSE dipped to Tk 99 crore negative in November after Tk 96.92 crore negative in October.

The market has been dwindling in the last 10 months making investors nervous on trading floor.

After a five-day gain, the DSEX began to decrease from Monday as many investors rushed to book profits after a slight gain, fearing return of the negative trend in the market.

Average share prices of cement, telecommunication, energy, and non-bank financial institution sectors dropped by 4.3 per cent, 3.5 per cent, 2.3 per cent and 0.9 per cent respectively.

EBL Securities, in its weekly market commentary, said, ‘Throughout the week investors maintained a cautious stance and engaged in short-term profit booking  selloffs in fear the market will witness correction.’

Share prices of the bank sector gained by 1.6 per cent over the past week as some investors anticipated that banks share prices may rise before their financial year closing on December 31.

Out of the 355 companies whose shares were changed hands in the past week, prices of 140 advanced, 194 declined and 21 remained unchanged.

The daily average turnover on the DSE dropped to Tk 462.19 crore over the past week from Tk 475.21 crore in the week before.

Shariah index of the bourse, DSES, lost 2.43 per cent, or 26.32 points, in the past week to close at 1,055.84 points.

DS30, the blue-chip index of the DSE, shed 2.54 per cent, or 41.89 points, to close at 1,605.82 points.

LafargeHolcim Bangladesh led the turnover chart for the third consecutive week with shares worth Tk 75.19 crore traded during the week.

Sonar Bangla Insurance, Paramount Insurance Company, Fortune Shoes, SK Trim and Industries, United Finance, Dutch-Bangla Bank, Sinobangla Industries, Premier Bank and LankaBangla Finance were the other leaders of the turnover charts.

Paramount Insurance Company performed the best during the week with a 38.40per cent increase in its share prices while Stylecraft Limited had the poorest performance, shedding 56.23 per cent.

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