Stocks tumble on rise of political risk

Stocks tumbled for the second consecutive week to Thursday as investors unnerved by growing political tensions continued to dump their holdings to safeguard their portfolios from further erosion.
Along with macroeconomic challenges, the rise of political risk in the run-up to the upcoming national polls has compounded the already bearish market sentiment seen since the imposition of 'floor price' over a year ago.
The free fall of the benchmark equity index this week is largely due to the price fall of large-cap stocks such as Olympic Industries, Square Pharma, LafargeHolcim, Emerald Oil Industries and Reliance Insurance.
These five stocks accounted for a 15-point fall in DSEX, the prime index of the Dhaka Stock Exchange (DSE).
Of the five trading days this week, the first three sessions suffered a fall of 35 points while the last two days gained nearly 12 points amid country-wide hartal and blockade enforced by BNP and other opposition parties.
The DSEX, the benchmark index of the DSE, settled 23.44 points or 0.37 per cent lower at 6,233.71. The DSEX plummeted more than 37 points over the past two weeks.
Two other indices also ended lower. The DS30 Index, which consists of blue-chip companies, shed more than 12 points to 2,106 and the DSES index, which represents Shariah-based companies, lost nearly 7 points to 1,352.
EBL Securities, in its weekly analysis, said stocks declined further as the investors focused on protecting their funds from the ailing market.
Some opportunistic investors preferred to chase rumour-based stocks in the last two days, but failed to recover the first three days' losses, it said.
The ongoing depressed market situation due to floor price, liquidity crunch and a lack of institutional support altogether eroded investors' confidence, said a leading broker.
Meanwhile, some low-performing stocks such as Fu-Wang Ceramic, Khulna Printing, Evince Textile, Yeakin Polymer and Pacific Denims dominated the weekly gainer chart.
These low-performing stocks have been significantly beating their industry peers that are in regular business operation, posting profits and giving dividends to their shareholders.
The participation of investors remained low and the total turnover of the week stood at Tk 20 billion, down from Tk 21.75 billion in the week before.
Accordingly, the average daily turnover stood at Tk 4 billion in the outgoing week, which was 8 per cent lower than the previous week's average of Tk 4.35 billion.
Majority of the traded stocks remained confined to the floor. Out of 378 issues traded, 215 remained unchanged, 120 witnessed price fall, and 43 saw price surge on the DSE trading floor.
Most sectors saw price erosion, with general insurance witnessing the highest price erosion, losing more than 0.6 per cent, followed by food, cement and paper & printing.
The engineering sector dominated in the week's turnover chart, accounting for 15.5 per cent of the week's total turnover, followed by textile and food.
Small-cap stocks dominated the turnover list as Fu-Wang Ceramic became the most-traded stocks, with shares worth Tk 1.59 billion changing hands, followed by Khulna Printing, Yeakin Polymer, Central Pharma, and C & A Textile.
Emerald Oil Industries was the week's top gainer, soaring 14.6 per cent while Fu-Wang Ceramic was the worst loser, wiping out 27.6 per cent.
The Chittagong Stock Exchange (CSE) also extended the losing streak for the two consecutive weeks with its All Share Price Index (CASPI) shedding 46 points to settle at 18,495 and the Selective Categories Index (CSCX) losing 28 points to close at 11,061.
The port city's bourse traded 16.38 million shares and mutual fund units with a turnover volume of Tk 387 million.

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