Free fall of stocks as core index sinks below 6100

BSEC sits with high-net worth investors today

FE REPORT | Monday, 25 July 2022

Stocks witnessed yet another massive fall on Sunday, with the key index of the prime bourse sinking below 6,100-mark, as the jittery investors continued their sell-off to exit from the market.
The market saw a sharp decline from the beginning of the session as panic-driven investors dumped their holdings amid fears over a possible economic depression in the coming months plunging below the 6,100-mark instantly.
Finally, DSEX, the prime index of Dhaka Stock Exchange (DSE), slid 74.07 points or 1.20 per cent to settle at 6,052, the lowest in nearly 13 months since June 29, 2021.
The core index shed more than 314 points while the market-cap wiped out Tk 204 billion in just nine trading days to Tk 4,984 billion, lowest in 14 months.
Market operators said the prolonged bearish sentiment kept cautious investors engaged in continuous sell-off as they anticipate a prolonged economic challenge ahead on the backdrop of global economic turmoil.
The market has been struggling for the past few months since the Russia-Ukraine war began which was exacerbated by fears over upcoming economic depression, said a merchant banker, seeking anonymity.
"Most of the investors were trying to exit from the market by selling their shares as they fear over economic challenges in the coming months," he said.
Panic-stricken investors kept their heavy sell-off as they apprehended the market might lose further as various media reports warned about the upcoming risk to the country's economy, he said.
The investors are suffering from a confidence crisis as they find no market trigger ahead, Mostaque Ahmed Sadeque, former president of DSE Brokers Association of Bangladesh, told the FE.
"The investors are in a tough situation as they are witnessing continuous erosion of their money," he said.
"The institutional investors should support the market to revive the retail investors' confidence," said Mr Sadeque, also managing director of Investment Promotion Services.
The investors started dumping equities right from the start of the trading session as the market outlook is still bleak and they are still worried about a number of macroeconomic headwinds, said EBL Securities.
The foreign currency reserves dropped below $40 billion, hitting a two-year low last week, while local currency is depreciating against the dollar and June inflation hit a nine-year high to 7.56 per cent.
Meanwhile, the stock market urged the market stakeholders to play a proactive role for revamping the market.
The Bangladesh Securities and Exchange Commission (BSEC) will gradually sit with merchant bankers, stock brokers, banks, listed companies and high net-worth individual investors.
The securities regulator will sit with the high net-worth investors today (Monday), said Mohammad Rezaul Karim, a BSEC executive director and spokesperson.
"The securities regulator wants to restore investors' confidence ensuring rational behaviour of institutional investors," he said.
Mr Karim said currently the market prices of many listed securities are below fair prices. "Under such a situation, general investors' confidence can be restored if institutional investors increase their participation."
Two other indices also slumped. The DS30 index, comprising blue chips, plunged 32.68 points to finish at 2,168 and the DSE Shariah Index (DSES) lost 16.72 points to close at 1,328.
Turnover, a crucial indicator of the market, also dropped to Tk 4.71 billion, which was 30 per cent lower than the previous day's tally of Tk 6.77 billion.
The investors' activities were mostly focused on the textile sector, capturing 27.6 per cent of the day's total turnover, followed by miscellaneous (12.7 per cent) and pharmaceuticals (11.5 per cent).
All the sectors faced heavy sales pressure, leading to the share price erosion of more than 83 per cent stocks. Out of 382 issues traded, 318 declined, 42 advanced and 22 issues remained unchanged on the DSE.
The Chittagong Stock Exchange (CSE) also plummeted with the CSE All Share Price Index - CASPI -shedding 161 points to settle at 17,807 and the Selective Categories Index - CSCX -plunging 97 points to close at 10,667.
Of the issues traded, 207 declined, 44 advanced and 18 issues remained unchanged on the CSE.

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