Dhaka stocks on Tuesday crash-landed to a nearly three and a half years low as panicked investors went for rampant selling as the government and market regulators remained oblivious to the ongoing market turmoil, said market operators. DSEX, the key index of Dhaka Stock Exchange, lost 1.78 per cent, or 78.66 points, to close at 4,419.82 points on Tuesday after losing 15.95 points in the previous session. On Tuesday, the index hit its lowest since June 27, 2016, when it was at 4,412.82 points. After a flat opening, the market started falling and descended more firmly to end the session deep into the negative zone as investors went for panic sales to avoid further losses, market operators said. They said that continuing fall in the share prices became unbearable for investors. The DSEX lost more than 1,531 points in last 11 months, eroding funds worth Tk 81,700 crore from the capital market that sent investors to the edge. Market operators said that although the key index was on the course for a full-blown crash, there was no movement from the government policymakers or the market regulators to instil confidence among investors. ‘It seems that the government policymakers don’t care about what is happening at the stock market although the key index lost more than 25 per cent in 11 months, with renewed intensity in recent days,’ said a stockbroker. He said that most of the investors were frustrated and hopeless and they did not know what to do next. The DSE was yet to get appointments with finance minister AHM Mustafa Kamal and Bangladesh Bank governor Fazle Kabir to discuss the relentless plunges in the share prices. A series of record lows for the DSEX with elevated volatility and falls in valuation of major companies had made investors jittery, market operators said. They said that a section of investors had already left the market while some others were waiting for a better exit as they found no reason for holding their shares for more time. The relentless fall reduced investment capacity of many institutional investors and high net worth investors and squeezed appetite for taking risks, they said. Former Bangladesh Securities and Exchange Commission chairman Mirza Azizul Islam told New Age that investors lacked confidence in the market. Many investors are grappling with a host of reasons including persistent volatility at the market, gloomy macroeconomic outlook and bleak financial sector, he said. He said that the market needed diversification and good companies to draw investors. Azizul said that the recent fall at the market created opportunity for investors as share prices of most of the companies dropped significantly. Decline in the private sector credit growth to a nine-year low, negative export earnings for last four months, poor tax revenue collection and heavy government borrowing were adding woes to the waning investors’ confidence. Besides, investors lost trust and confidence in the regulators as they repeatedly failed to reform the market with diversification of products and good companies, bringing governance within the companies and eliminating unscrupulous practices from the market. The share prices of Ring Shine Textiles continued plunging on Tuesday after a shining opening on the debut day on December 12 as investors were fretted over its entry with whopping paid-up capital. The share prices of Ring Shine dropped by 18.6 per cent in last two sessions to close at Tk 12.20 per share on Tuesday, after closing at Tk 15 per share on its debut day. The company raised Tk 275 crore through issuance of placement shares in 2018 and the company also raised Tk 150 crore through its initial public offering that lifted its post-IPO paid up capital to Tk 435.05 crore with 43.5 crore shares. The declaration of 15 per cent stock dividend will add around 6.5 crore shares worth Tk 65 crore to the amount to make the paid up capital to around Tk 500 crore. Investors were suspicious about the company’s ability of giving cash dividend against its huge number of shares amid lack of confidence in the BSEC which allegedly brought a number of weak IPOs to the market in recent years. The bonus shares that would be allotted to shareholders other than those of the sponsors and directors will be locked-in free, which is also a concern among investors. Besides, continued sale of shares by foreign investors and forced sales by the brokerage houses have exacerbated the market situation. Foreign investors withdrew around Tk 970 crore from the country’s capital market in last 10 months. Despite having idle funds, banks remained reluctant to invest in the capital market, given its ailing condition. EBL Securities in its daily market commentary said that failure of the ever falling DSEX index in showing any notable signs of recovery for last six months and worrying performance of macroeconomic indicators compelled investors to hold a grim outlook of the market. The share prices of almost all the sectors declined on the day. The average share prices of telecommunication dropped by 2.9 per cent, textiles 2.8 per cent, non-bank financial institution 2.78 per cent, energy 2.2 per cent and bank 1.4 per cent. Turnover on the DSE plunged to Tk 281.56 crore on Tuesday from Tk 306.54 crore in the previous trading session. Out of the 343 scrips traded on Tuesday, 278 declined, 35 advanced and 40 remained unchanged. The DSE blue-chip index, DS30, shed 1.97 per cent, or 30.33 points, to close at 1,508.28 points. Shariah index DSES lost 1.99 per cent, or 20.27 points, to end at 994.78 points. Ring Shine Textiles led the turnover chart with its shares worth Tk 15.68 crore changing hands on the day. Beacon Pharmaceuticals, Square Pharmaceuticals, Standard Ceramics, BRAC Bank, Khulna Power Company, Genex Infosys, Bangladesh National Insurance Company, National Tubes and Grameenphone were the other turnover leaders. Anlima Yarn Dyeing gained the most on the day with an 8.19-per cent increase in its share prices while Tung Hai Knitting and Dyeing performed the worst, losing 9.09 per cent.
Source – New Age
