The benchmark index of the Dhaka Stock Exchange (DSE) plunged 380 points in the first six months of 2022 as the jittery investors dumped their holdings amid macroeconomic worries.
The market has been in doldrums during the period under review amid confidence crisis among investors while Russia-Ukraine war exacerbated the situation.
The market was bearish in four months out six as the core index suffered losses of 560 points in four months while gaining 180 points in January and March, according to statistics with the DSE.
Between January 1 and June 30, 2022, DSEX, the key index of the DSE, slid 380 points or 5.62 per cent to settle at 6,377 on June 30. In January-June 2021, the DSEX surged 531 points.
Two other indices also followed suit. The blue-chip index DS30, which groups 30 prominent companies, plunged 237 points to finish at 2,296 and the DSE Shariah compliant Index dropped 44 points to close at 1,387 on June 30.
Market capitalisation of the prime bourse also shed Tk 244 billion in six months and the total market-cap of the DSE stood at Tk 5,178 billion on Thursday.
The daily turnover, another important gauge, came down to Tk 9.60 billion on an average in January-June 2022. In January-June 2021, daily average turnover was Tk 12.44 billion.
Market operators said multiple factors such as Russia-Ukraine war, soaring inflation, and volatile foreign exchange market and rise in business cost have together hurt investors' sentiment.
A rise in imports, imbalance in current account balance, shortage of dollars and Sri Lanka's worst economic crisis also hit investors' sentiment, they said.
The nervous investors sold shares amid tension over the country's macroeconomic situation fueled by Russia- Ukraine war and global commodity price instability, said a merchant banker, seeking anonymity.
The inflation is rising quickly owing to global commodity market instability. Inflation shot up to 7.42 per cent in May - highest in eight years - amid persistently rising food and non-food prices.
The several regulatory steps to restore investors' confidence and increase funds flow in the market also failed to bring the market stability, he said.
The Bangladesh Securities and Exchange Commission (DSE) in May raised the margin loan limit to 1:1 to enhance liquidity and lowered the circuit breaker limit to 2.0 per cent from 10 per cent to curb the free-fall of stocks.
The regulatory efforts could not bring back investors confidence amid the rising cost of living while foreign investors' sell-off due to weakening local currency kept investors worried, said a leading broker.
However, shares of many low-performing companies saw 'abnormal' price hikes during the period under review while large-cap stocks saw price erosion, he said.
Manipulation was the weaker side of the market. The share prices of small-cap companies rose sharply without justified reasons, he added.
For example, Imam Button Industries, a junk stock, surged 451 per cent in six months, the highest gainer among all listed securities during the period under review despite the company incurred huge losses and not in production since April 2020.
Newly listed non-life Meghna Insurance was the second highest gainer, posting a 393 per cent rise, followed by JMI Hospital Requisite Manufacturing 273 per cent, Union Insurance 240 per cent and BD Thai Food & Beverage 223 per cent gain.
Most sectors faced price erosion, with general insurance suffering the most with a 23 per cent loss as prices of most insurers fall during the period after sharp rise in the last year.
The IT sector also lost 19 per cent, followed by life insurance 16 per cent, telecom 11 per cent, financial institution 11 per cent, food 10 per cent, cement 6.0 per cent and banking 3.0 per cent, according to International Leasing Securities.
On the other hand, ceramic saw the highest gain of 22 per cent, followed by travel & leisure 11 per cent, textile 8.0 per cent, engineering 3.0 per cent and power 2.0 per cent.
The Chittagong Stock Exchange (CSE) also suffered losses during the period under review with the CSE All Share Price Index - CASPI -shedding 939 points to settle at 18,727 and the Selective Categories Index - CSCX losing 587 points to close at 11,226 on June 30.
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