DSE turnover dips to new low

FE Report Turnover value at the Dhaka Stock Exchange (DSE) Monday plunged to a new low in five years, as investors continued to stay away from trading activities. Total turnover value at the DSE declined by 4.3 per cent from the previous trading session to Tk 1.01 billion, and broke the previous low turnover record of Tk 1.04 billion last Tuesday. It was also the lowest turnover value since January 8, 2008. Shares worth Tk 815.47 million were transacted on that day. However, on January 20, 2011 the turnover was only worth Tk 680 million as trading on that day was suspended only after five minutes following investors' violent protest against massive fall in stock prices. The DSE General Index (DGEN) ended at 4,116.25 points, losing 20.61 points or 0.49 per cent, on Monday. The premier bourse's highest-ever turnover was Tk 32.49 billion on December 5, 2010, when the DGEN also hit the record high of 8,918.58 points. The DSE is witnessing low turnover in the recent days when its leaders are holding a series of meetings with stock dealers, bankers and bank owners, the insurance association and the apex trade body to find ways to rejuvenate the bearish stock market. The bearish trend is expected to be chronic, if the market does not get adequate liquidity support from the institutional investors, a market analyst said. A B Mirza Azizul Islam, former finance adviser to the caretaker government, said investors because of lack of confidence are not taking part in trading, which has remitted in low turnover. According to him, liquidity shortage is not at a problem in the market. "The main problem is lack of confidence in the secondary market," Mr Islam told the FE. The investors are more interested to invest in the IPOs (initial public offerings) right now instead of investing in the secondary market, as they have lost confidence in the secondary market, he said. "The institutional and big investors are also inactive in the market, and they are adopting wait-and-see policy," said Mr Islam, also a former chairman of the Bangladesh Securities and Exchange Commission (BSEC). "Non-implementation of the stimulus package and the promised interest waiver for small investors, failure to take actions against market manipulators, lack of participation of institutional investors, macro-economic problems, and sluggish trend of investments have sharply eroded investors' confidence," he said. He said first of all the securities regulator should strengthen its market monitoring efforts to bring back investors' confidence. "The Ministry of Finance, the BSEC and the Bangladesh Bank should come forward to salvage the market immediately." "The central bank should come forward with a special fund to buy undervalued assets, otherwise it will be difficult to bring back the investors' confidence as far as the market is concerned," he added. "Liquidity crisis has appeared to be more acute, as political tension is on the rise. As a result, the coming few days may show worse scenario than this," stated Zenith Investments, an asset management company, in its regular market analysis. "Technically and fundamentally there are signs of a market turnaround. But anxiety over political situation and the next monetary policy statement may delay the long-expected turnaround," it added. Akter H Sannamat, managing director of Union Capital, said the investors' low confidence is reflected in turnover and trade volume. "Institutional investors are inactive that has led the small investors to adopt wait-and-see policy in the market." "KYC (know your client) issue, omnibus accounts issue, Padma Bridge issue, and monetary policy issue have made the investors panicky, and they are preferring to stay away from trading, casting a negative impact on the market," he added. "The turnover level indicates to lack of both individual and institutional participation in the market. There is confusion regarding capital components, on which investment limit is to be set for banks in the amendment of the Bank Company Act," commented LankaBangla Securities, a leading stock broker. In this market, only foreign institutional investors seem to be in buying mood. Although liquidity support seems to be abundant, retail participation is inadequate to hold the market together, it added.