Stocks tumble to four-month low amid panic over Islamic banks’ merger

Stocks deepened their bearish spell, breaking the psychological threshold of the 5,000-mark after four months on Wednesday, as jittery investors dumped their holdings to escape further losses.
Market analysts said investors had been suffering from a confidence crisis for a long time, while the news of the dissolution of the boards of five crisis-hit Islamic banks exacerbated the market situation.
The Bangladesh Bank on Wednesday dissolved the boards of the troubled banks and appointed administrators as part of the official start of the merger process.
The banks - First Security Islami Bank, Social Islami Bank, Union Bank, Global Islami Bank, and Exim Bank - have been merged into a new entity named Sammilito Islami Bank.
The combined market capitalisation of these banks dropped to Tk 13.75 billion on Wednesday, from Tk 17.3 billion five months ago before the merger news.
Currently, general investors, institutions, and foreigners together hold between 45 per cent and 94 per cent of these banks' shares. As a result, around 60 points could be wiped off the prime index with the elimination of free-float shares.
Ahsan H. Mansur, governor of the central bank, said at a press briefing on Wednesday that the net asset value was between Tk 350 and Tk 420 in the negative per share for the troubled banks.
Hence, the value of the shares of both sponsor shareholders and general shareholders will be considered zero. As a result, shareholders will not get any compensation, he said.
Although banking operations will continue as usual during the merger process, shareholders remain in the dark about whether trading of these bank stocks will continue on the stock exchanges.
Md Abul Kalam, director and spokesperson of the Bangladesh Securities and Exchange Commission, said the commission is yet to receive any official letter in this regard.
Although the market witnessed a positive note at the opening on Wednesday, broad-based sell-offs emerged in the final hour as investors adopted a defensive stance.
The DSEX, the prime index of the DSE, lost 32 points or 0.64 per cent to settle at 4,987 - the lowest in four months since July 7 this year. The DSEX has lost 130 points in the past four consecutive sessions.
EBL Securities said the negative sentiment continued to prevail amid lingering political uncertainties surrounding the national election, dragging the benchmark index to a four-month low.
The DS30 index, a group of 30 prominent companies, also shed 6 points to 1,940, while the DSES index, which represents Shariah-based companies, lost 11 points to 1,044.
Market liquidity remained subdued as total turnover stayed below Tk 5 billion, amounting to Tk 4.85 billion compared to Tk 4.53 billion in the previous session.
Major sectors suffered losses. The non-bank financial institutions sector witnessed the highest loss of 1.47 per cent, followed by power, engineering, banking, food, and pharmaceuticals.
Losers outnumbered gainers, as out of 400 issues traded, 267 saw price corrections, while 70 gained and 63 remained unchanged on the DSE floor.
Orion Infusion was the most-traded stock, with shares worth Tk 336 million changing hands, followed closely by Summit Alliance Port, Anwar Galvanizing, Asiatic Laboratories, and CVO Petrochemicals Refinery.
The Chittagong Stock Exchange also ended lower, with its All Shares Price Index (CASPI) losing 106 points to 14,028, while the Selective Categories Index (CSCX) lost 69 points to 8,652.

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