Dhaka stocks plunged for the third day on Monday, hitting a 39-month low as investors went for panic selling due to fears that the market would fall further amid economic woes.
DSEX, the key index of Dhaka Stock Exchange, lost 1.35 per cent, or 62.25 points, to close at 4,533.75 points on Monday. The DSEX lost 170 points in last three sessions.
The index hit its lowest on Monday after 4,526.57 points on August 31, 2016.
The key index lost more than 1,416 points in last 10 months, eroding Tk 75,068 crore in market capitalisation.
Market operators said the market started falling after a slight gain on Monday and plunged sharply as the session progressed to close in the negative zone as investors continued selling shares amid the ongoing concerns over the country’s economy.
The recent media reports over slowing economy were enough to sour some optimism seen in the last couple of weeks, they said.
They said continuing fall in the private sector credit growth, negative export earnings for last four months, poor tax revenue collection and heavy government borrowing reflected a gloomy state of the country’s economy.
The private sector credit growth hit a fresh nine year-low of 10.04 per cent in October amid a stagnant business condition.
The export earnings in November of this fiscal year of 2019-20 declined to $3.05 billion from $3.42 billion in the same month of FY 2018-19.
EBL Securities in its daily market commentary said, ‘Concern over exports’ de-growth, soaring non-performing loans in banks and decreasing private sector credit growth exacerbated the ongoing confidence crisis among retail and institutional investors.’
Market operators said the increased government borrowing from the banking sector and rally of banks’ defaulted loans kept hammering the financial industry.
Banks’ defaulted loans swelled to Tk 1,16,288 crore with the addition of Tk 3,863 crore in defaulted loans in July-September while the government’s net borrowing from the banking system ballooned to Tk 43,411.13 crore until November this year.
The government also failed to reduce bank’s interest rate to single digit despite repeated attempts that increased cost of business.
The foreign investors have continued pulling funds out of the country’s capital market in recent months that has become a paramount concern among the investors.
Bangladesh Securities and Exchange Commission chairman M Khairul Hossain on Monday met with finance minister AHM Mustafa Kamal and discussed the ailing capital market.
Kamal assured the BSEC chairman that the government would provide all kinds of supports to revive the market.
A BSEC official said the ministry would also assess the proposal submitted by a group of stockbrokers seeking Tk 10,000 crore funds to invest on the market.
EBL Securities managing director Sayedur Rahman said the market needed supply of funds for recovery.
BRAC EPL chief executive officer Sharif MA Rahman said that many investors were waiting for more plunges so that they could buy shares at the lowest possible prices.
‘How all of them could get the optimum prices if everyone jumps for buying shares at the same time?’ he questioned.
He suggested that investors should invest now as the share prices became lucrative.
Market operators said the continuing plunges in share prices reduced investment capacity of the market intermediaries and high net worth investors.
The brokerage houses went for forced sales to minimise risks in margin loans, they said.
The market has been dwindling since March, 2018 on various issues including volatility in the financial sector, political uncertainty, pressure on the exchange rate and tussle between the DSE and the market regulator over some issues.
The approval of fundamentally weak companies with huge amount of placement shares, absence of governance and poor regulatory control keep hammering the investors’ confidence.
Therefore, some regulatory relaxations and incentives offered by the BSEC to the market intermediaries failed to change market scenario.
On Monday, share prices of the pharmaceutical sector plunged by 1.7 per cent, non-bank financial institution 1.3 per cent, energy 1.2 per cent, telecommunication 1.1 per cent and bank 0.7 per cent.
Turnover on the DSE plunged to Tk 275.29 crore on Monday from Tk 349.01 crore in the previous day.
Out of the 343 scrips traded on Monday, 233 declined, 67 advanced and 53 remained unchanged.
DSE blue-chip index DS30 shed 1.36 per cent, or 21.54 points, to close at 1,561.50 points.
Shariah index DSES lost 1.82 per cent, or 19.02 points, to end at 1,022.27 points.
Square Pharmaceuticals led the turnover chart with its shares worth Tk 89 crore changing hands on the day.
The DSE at a board meeting on Monday decided to hold meetings with finance minister AHM Mustafa Kamal and Bangladesh Bank governor Fazle Kabir to submit a set of proposals related to the stock market revival.
The board directed the management to seek appointment from them and prepare a set of proposals regarding the market.
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