Stocks post highest weekly gain in 9 years braving turbulence

Staff Correspondent | Published at 11:23pm on January 25, 2020

Dhaka stocks soared in the past week, posting a highest single-week gain in nine years, as investors went for heavy buying following the prime minister’s move to stabilise the ailing market.

DSEX, the key index of the Dhaka Stock Exchange, advanced by 364.06 points or 8.77 per cent, to close at 4,513.89 points on Thursday, the last trading session of the past week, after losing 309.5 points in the previous two weeks.

Last week’s gain was the highest after the week ending on January 27, 2011 when the then DGEN gained 1,054 points. The DGEN was replaced by the DSEX on January 27, 2013.

The market gained in four sessions during the five-day week. The DSEX started with a whopping gain of 231 points on Sunday and held the positive momentum throughout the week, except for a profit booking session, market operators said.

The investors, encouraged by a number of initiatives from the government and the Bangladesh Bank to halt the market crash, went for heavy buying over the past week.

A meeting of policymakers in presence of prime minister Sheikh Hasina at her office in Dhaka on January 16 that made a six-point proposal, emphasising an increase in the fund flow to the market encouraged the investors most to inject funds in the market.

Many investors put a pause on panic sales as they anticipated that the market would be revived as the government had started to show concern for the ailing market.

The meeting proposed that the government should create mechanisms for ensuring increased participation of banks and non-bank financial institutions, expand the capacity of the Investment Corporation of Bangladesh and provide funds to market intermediaries.

As part of the initiatives, the Bangladesh Bank has sent a proposal for a Tk 10,000crore fund to the finance ministry for government approval that is expected to alleviate the liquidity shortage in the market. The loans will be distributed on easy terms.

The government became active after the core index of the DSE hit a 56-month low on January 14 due to a relentless fall in share prices in the last 12 months that drawn criticism for the government for remaining apathetic towards the capital market.

On January 9, the core index recorded its worst single-week loss in eight years after shedding 261 points in a week.

BB governor Fazle Kabir  said on a couple of occasions in the past that the central bank would extend whatever support was needed to revive the stock market while the top brasses of four state-run banks at a January 16 meeting agreed to increase investment in the capital market following government directions to do so.

EBL Securities in its weekly market review said, ‘The capital market has reacted with extreme positivity to the prime minister’s directive towards the BSEC to form policies for reviving the capital market and the Bangladesh Bank’s proposal to finance ministry for formation of a BDT 100-billion fund for market operators.’

Average share prices of all the sectors went up by 4 per cent to 21 per cent each.

Among the large capitalised sectors, the share prices of non-bank financial sectors increased the most, with a rise of 21 per cent followed by telecommunication with a 13per cent increase, energy with an 8.5-per cent increase, pharmaceuticals with an 8.2-per cent rise, bank with a 6.2-per cent rise and textile with a 4.1 per cent rise.

The investors mostly focused on large capitalised companies as the share prices of these companies fell significantly in the recent rout, ignoring their financial accounts.

Share prices of the Investment Corporation of Bangladesh shot by 41.1 per cent while British American Tobacco gained by 14.3 per cent, Grameenphone by 12.3 per cent and Square Pharmaceuticals by 11.5 per cent in the past week.

Share prices of Square Pharma gained after two other directors declared to buy 6 lakh shares of the company.

Out of the total 357 scrips traded last week, the prices of 328 advanced, just 23 declined and seven were unchanged.

The daily average turnover on the DSE rose to 453.15 crore in the past week compared to Tk 264.14 crore in the week before.

Shariah index of the bourse DSES added 10.13 per cent, or 95.2 points, in the past week and closed at 1,035 points.

DS30, the blue-chip index of the DSE, gained by 9.73 per cent, or 136.83 points, and closed at 1,543.43 points.

LafargeHolcim Bangladesh led the turnover chart with shares worth Tk 133.32 crore traded last week.

Square Pharmaceuticals, SS Steel, Khulna Power Company, Grameenphone, Beacon Pharmaceuticals, Singer Bangladesh, Paramount Textile, ADN Telecom and SK Trims were the other turnover leaders.

The Investment Corporation of Bangladesh fared the best in the past week with a 41.09-per cent increase in its share prices while SS Steel performed the worst, losing 15.63 per cent.