Multinational companies (MNCs) failed to perform well in the secondary market last year because of macroeconomic worries and liquidity shortage.
Despite being fundamentally strong, a majority of these companies witnessed price erosion throughout the year, except for a few sessions immediately after the political changeover on August 5.
Ten out of 13 MNCs plunged about 6-48 per cent in 2024 on the Dhaka Stock Exchange (DSE).
The three entities, which ended the year with an appreciation, are Grameenphone, Berger Paints Bangladesh, and Unilever Consumer Care. The stocks experienced price escalation by nearly 3-26 per cent.
Behind the poor performance of MNCs were monetary tightening policy and inflation.
"People's disposable incomes remained squeezed following a rise in inflation. That's why participation in the market was thin throughout the year," said Md. Ashequr Rahman, managing director of Midway Securities.
Except for two organisations, MNCs have huge free float and so they are unlikely to be targeted by gamblers, a major reason as to why they did poorly even compared to some junk stocks.
It is easy to drive junk stocks up with limited funds. When artificial rallies happen, general investors and even the market operators join the rallies with hopes for quick gains. Such manipulated price movements happened in 2024.
For example, Khan Brothers PP Woven Bag Industries, which made losses for the four years through FY23 and earned a nominal profit worth Tk 0.86 million in FY24, made it to the chart of top 10 gainers of 2024, with an appreciation of 35 per cent.
On the other hand, the stock of Marico Bangladesh, which secured a growth in profit even in an adverse climate in 2024, slid 7.23 per cent in the secondary market in the year.
The withdrawal of floor price had a negative impact on the market too. The stocks, which had been languishing on the floor for about 18 months until January last year, experienced huge correction as expected on the resurgence of price discovery.
Floor price remained effective for 35 stocks, including BATBC and Robi Axiata, until March last year after the lifting of the price restriction in the first phase. So, the MNCs that had been subject to floor price for a longer period witnessed lower investor participation.
Three gainers
After the change in the political landscape in August last year, Grammenphone shot up on the bourses.
Investors might have become buoyant about the company's business potential with one of its patrons getting in the driving seat of the interim government, said Mr Rahman. "The same thing happens in other countries."
After the victory of Donald Trump in America's national election, the stock price of Tesla surged as its owner Elon Musk supported Trump in the election.
On the significant stock price rise of Unilever Consumer Care, market operators said state-run Investment Corporation of Bangladesh (ICB) put in huge investments in the stock in April and May.
The corporation, which has huge purchasing capacity, helped Unilever Consumer Care close the year with an appreciation of 26.27 per cent.
Berger Paints issued rights shares in December at a ratio of 1:1, meaning one rights share was issued against 1 existing share.
The rights shares lured investors to the stock of Berger Paints as they were able to get the shares of a fundamentally strong company at a price of Tk 1,110 each whereas the company's shares traded at prices between Tk 1,700 and Tk 1,800 each in the market.
The company's share price advanced around 4 per cent in December alone.
Exceptionally upbeat few sessions
In a few trading sessions since August 6, good companies, especially MNCs, witnessed investors' huge participation. Market turnover was mainly driven by such companies after the political shift as investors had hopes of good return from the well-governed companies.
Grameenphone experienced an appreciation of 53 per cent between August 4 and August 14, followed by LafargeHolcim 21 per cent and BATBC 18 per cent.
"Investors thought it was an opportunity for the market to turn around," said Ashequr Rahman, MD of Midway Securities.
But the momentum did not last long as there was no positive change in the macroeconomic situation. Moreover, political uncertainties resurfaced.
So, MNCs again started to lose price, resulting in most of them ending the year with a negative return.
For example, LafargeHolcim, which gained 21 per cent on August 6-14, fell 20 per cent by November 28.
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