A file photo shows investors monitoring share price movements on computer screens at a brokerage in the capital Dhaka. — New Age Photo
Shares in Dhaka plunged last week as economic concerns, the electricity crisis, ongoing market manipulation and the persistent downtrend pushed investors out.
The Dhaka Stock Exchange’s key index, DSEX, lost 3.13%, or 197.99 points, over the past week, to close at 6,126.52 points on July 21, the last trading session of the week.
The DSEX has lost 250 points over the past three weeks.
The market hasn’t gained a single session in the past two weeks as investors rushed to exit the market to save their portfolios from further erosion, market operators said.
According to data from Central Depository Bangladesh, investors sold all shares held in 75,160 beneficial owner accounts in the last seven sessions, while the number was 47,000 BO accounts in the last three days.
The outflow could have been more intense if there had not been a 2% lower circuit on all companies, as the restriction prevented high-profile investors from selling a large volume of shares, traders said. market.
The market has fallen 17.3% since the October zenith due to the Russian-Ukrainian war and its negative impact on the economy.
The DSEX hit an all-time high of 7,367.99 on October 10, 2021.
Rising inflation, record trade deficit, continued decline in foreign exchange reserves, increased external lending and government bank borrowing, and currency volatility have become primary concerns for investors, traders said. of the market.
Media reported that Bangladesh’s foreign exchange reserves fell to $39.77 billion and the taka depreciated to 94.45 against the US dollar.
The continued outflow of foreign funds in the wake of exchange rate volatility weighed heavily on the stock market.
Total foreign investment in the DSE fell to Tk 9,976 crore, or 2.19% of the exchange’s total market capitalization, with foreign investors withdrawing around Tk 7,000 crore from the market since 2018.
Investors have become unsettled on the trading floor after the government’s decision to shed and shut down diesel power stations across the country as it exposed malaise in the economy.
Businesses have started to count the financial cost of the current instability in the economy and outages.
Market operators said manipulation, fraudulent activity, regulatory inaction and asymmetric actions have also shaken investor confidence in the market.
Thus, investors watched the key index fall to a level on July 21 not seen since August 2021.
The downtrend has been intense over the past six months, which has eroded investors’ appetite for risk taking, market traders said.
On February 1, the market capitalization was Tk 5.61 lakh crore which plunged from Tk 58,000 crore to Tk 5.03 lakh crore on July 21.
Investors now prefer to sit on the sidelines to watch the market’s next move, they said.
Thus, the average daily turnover, a key indicator of investor participation, fell to Tk 554.13 crore last week from Tk 654.14 crore the previous week.
Bangladesh Merchant Bankers Association Secretary General Riyad Matin told New Age that the market is unstable due to the current pressure on the national economy amid the global economic crisis.
Due to exchange rate volatility, foreign investors withdrew funds from the stock market, he said.
A possible lifting of the interest rate ceiling could also negatively affect the stock market, he said.
EBL Securities, in its weekly market commentary, said: “Stock indices on the Dhaka Stock Exchange extended their downward trend over the past week as the market suffered from selling pressure amid concerns investors were skyrocketing due to the austerity policies announced by the government to combat the dominant power and energy crisis in the country.
“Pressure on foreign currency reserves, widening current account deficit, rising inflation and recent energy crisis issues are the main macro issues for investors,” he said.
Average stock prices across all sectors fell over the past week, while stock prices in the general insurance, energy, non-banking financial institutions, textiles and banking sectors declined of 6.5%, 4.7%, 3.9%, 2.8% and 1.3%. percent respectively.
The DS30, made up of 30 large-cap companies, plunged 73.02 points to end at 2,200.83 points and the DSE Shariah Index, DSES, plunged 32.27 points to close at 1,345.09 points.
Bangladesh Export Import Company was the most traded company with its shares worth Tk 145.58 crore changing hands during the week.
Sonali Paper, Delta Life Insurance Company, Intraco Refueling Station, KDS Accessories, Orion Pharma, Titas Gas, Fortune Shoes, British American Tobacco and Shinepukur Ceramics were other revenue leaders.
HR Textile was the week’s best performer, posting a gain of 21.4%, while Imam Button Industries was the worst loser, losing 9.44%.