Life insurance cos drag down prime index as policyholders' complaints come to the fore

Stocks failed to stay afloat as investors preferred to book profit on quick-gaining stocks, particularly of the life insurance sector.
Life insurance companies that had soared in recent weeks were eroded 5 percent in a single day after the news that the insurance regulator appointed observers to four life insurers.
Among the four, three are listed on the stock exchanges --- Progressive Life Insurance, Padma Life Insurance, and Sunlife Insurance.
The Insurance Development and Regulatory Authority (IDRA) appointed observers for their failure to protect the interests of policyholders, according to a regulatory filing published on Sunday.
It received complaints over the years from policyholders. Non-payment of claims on time has been causing extreme dissatisfaction among customers, tarnishing the image of the insurance industry, said the IDRA.
Following the news, investors dumped their holdings of life insurance companies, dragging the prime index down.
As a result, six out of top 10 losers were life insurers. The top losers include Popular Life Insurance, which lost 9.94 per cent, followed by Meghna Life, Popular Life, Rupali Life, Padma Life, and National Life.
Cautious investors liquidated most of their assets from life insurance sectors, said International Leasing Securities.
The market opened higher and remained positive until the first half of the session, but the later half went down steadily amid selloffs of life insurance stocks.
DSEX, the prime index of the Dhaka Stock Exchange (DSE), finally fell by 11.26 points to settle at 6,341, after gaining 37 points in the past two trading sessions.
The DS30 Index, which consists of blue-chip companies, also dropped 1.90 points to 2,190 and the DSES Index, which represents Shariah-based companies, fell by 0.77 points to 1,377.
Turnover, an important indicator of the market, also slid 3.10 per cent to Tk 10.30 billion.
Market experts said cautious investors booked some profits on stocks that had seen significant gains in the past few trading days, taking the market into the red territory.
Profit-booking in the life insurance sector is a reason behind the day's fall, said Md Sajedul Islam, senior vice president of the DSE Brokers Association of Bangladesh.
Investors were also alarmed by the energy situation alongside the runaway inflation.
Inflation jumped to a decade high at 9.94 per cent in May, which prompted some investors to book profits in anticipation of a tougher time ahead. The ongoing energy shortage added to the crisis.
EBL Securities said the market witnessed mild volatility as sellers dominated the market.
Investors preferred to keep an eye on market momentum following the new income tax act as well as announcement of the national budget.
Losers took a strong lead over gainers as out of 354 issues traded, 114 declined, 64 advanced and 176 remained unchanged.
The life insurance sector dominated the day's turnover chart accounting for more than 29 per cent of the total turnover.
Meghna Life Insurance became the most-traded stock, with shares worth Tk 556 million changing hands, followed by Navana Pharma, Fareast Life, Sonali Life and Trust Islami Life Insurance.
The Chittagong Stock Exchange (CSE) also ended lower with its All Share Price Index (CASPI) losing 20 points to settle at 18,742 and the Selective Categories Index (CSCX) falling 10 points to close at 11,211.
The port city's bourse traded 3.98 million shares and mutual fund units with a turnover volume of Tk 215 million.

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