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Stocks break two-day losing streak riding on insurers

Top 10 gainers belong to insurance sector


FE REPORT | January 20, 2021 00:00:00


Stocks edged higher on Tuesday, snapping a two-day losing streak, as bargain hunters put fresh bet on insurance issues riding on regulatory moves.

DSEX, the prime index of the Dhaka Stock Exchange (DSE), went up by 19.08 points or 0.32 per cent to settle at 5,820, after losing 108 points in the two consecutive sessions.

Market analysts the investors showed their appetite on insurance stocks riding on the news that IDRA directed the insurance companies to comply with the enhanced paid-up capital and minimum shareholding rules within a month.

The Insurance Development and Regulatory Authority has asked all insurance companies to comply with rules by raising shareholdings by their sponsors to 60 per cent in their respective companies and the companies' minimum paid-up capital to Tk 300-400 million within one month.

IDRA issued letters to the companies on Sunday in this regard.

In the letter, IDRA asked the insurance companies to comply with section 21(3) of Insurance Law, 2010 within a month.

According to the rules, an insurer, incorporated in or outside Bangladesh before the commencement of this act, must have a minimum paid-up capital of the amount specified in schedule-1.

For life insurance companies, the paid-up capital must be at least Tk 300 million of which 60 per cent must be subscribed by the sponsors and the remaining 40 per cent must remain open for public subscription, according to the schedule-1.

For non-life insurance companies, paid-up capital must be at least Tk 400 million of which 60 per cent must be subscribed by the sponsors and the remaining 40 percent must remain open for public subscription.

Of the 49 listed life and non-life insurance companies, only five companies have more than 60 per cent shares held by their sponsor-directors.

46 out of 49 insurers rallied on the IDRAnews.

Following the news the general insurance sector soared 9.50 per cent and life insurance jumped 5.20 per cent.

The insurance sector has helped the benchmark index close higher spurred by the news, said a leading broker.

He noted that the investors' confidence remained high as the country's overall economy continued recovering in the post Covid-19 phase.

All top 10 gainers belonged to insurance sector, led by Agrani Insurance, Green Delta Insurance, Pragati Insurance, Provati Insurance and Dhaka Insurance. Share prices of the first three companies were frozen at 10 percent each--the upper limit circuit breaker.

EBL Securities said bargain hunters showed their appetite on insurance issues as the long-anticipated directive from IDRA finally asked insurers to comply 60 per cent holding within a month.

The DSE 30 Index comprising blue chips also advanced 8.36 points to finish at 2,203. However, the DSE Shariah Index (DSES) fell 2.11 points to close at 1,291.

Turnover, a crucial indicator of the market, however, plunged to one-month low to Tk 12.90 billion on the country's premier bourse, slumping by 15 per cent over previous day's mark of Tk 15.19 billion.

Banking sector witnessed the highest correction, losing 1.82 per cent, followed by telecommunication 0.87 per cent, engineering 0.77 per cent, power 0.50 per cent and financial institutions 0.10 per cent.

Gainers took a modest lead over the losers, as out of 357 issues traded, 181 advanced, 106 declined and 70 remained unchanged on the DSE trading floor.

RobiAxiata topped the turnover chart with 26.36 million shares worth Tk 1.46 billion changing hands, closely followed by Beximco, Summit Power, Beximco Pharmaceuticals and LankaBangla Finance.

Agrani Insurance was the day's best performer, posting a gain of 10 per cent while Padma Oil Company was the worst loser, losing 7.83 per cent.

The Chittagong Stock Exchange (CSE) also edged higher with the CSE All Share Price Index - CASPI -advancing by 16 points to settle at 16,896 and the Selective Categories Index - CSCX gaining 16 points to close at 10,193.

Of the issues traded, 129 advanced, 90 declined and 59 remained unchanged on the CSE.

The port city's bourse traded 24.29 million shares and mutual fund units with turnover value of Tk 868 million.

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