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Stocks extend winning streak amid rising turnover

Transaction jumps 67pc on DSE

FE REPORT | July 09, 2020 00:00:00

Stocks extended the winning streak for the third consecutive session Wednesday as some investors continued to show their appetite following the ultimatum by the securities regulator to the directors to comply with its directive to maintain minimum share-holding.

DSEX, the key index of the Dhaka Stock Exchange, went up by 32.83 points or 0.82 per cent to settle at more than one month high at 4,034 during four hours trading as the bourses resumed normal trading schedule. It was also the highest single-day gain since June 1 of this year.

Market operators said the securities regulator's ultimatum to non-complaint directors of listed firms to ensure holding of minimum 2.0 per cent shares within 45 days led the buy pressure in the market.

The stock market regulator has recently asked 61 directors of 22 listed companies to ensure a minimum 2.0 per cent shares in their own companies within 45 days to continue their directorship.

If any director fails to comply with the 2.0 per cent shareholding rules within stipulated time, his/her position would be automatically vacated, according to the Rules.

To comply with the rules, many directors will have to buy shares within the 45-day time frame which boost the investors' confidence, said a leading broker.

He noted that buy pressure on banking, general insurance, life insurance and pharma stocks helped the index up.

The general insurance and life insurance gained 2.80 per cent and 2.10 per cent respectively as most of the non-complaint directors from insurance sector.

According to media reports, of the 22 companies, 14 are from the insurance sector, which have 49 non-compliant directors.

The heavyweight banking sector posted a 1.30 per cent gain, followed by pharma with 0.30 per cent and NBFIs 0.10 per cent.

Two other indices also ended higher. The DS30 index, comprising blue chips, gained 11.02 points to finish at 1,357 and the DSE Shariah Index rose 4.79 points to close at 928.

Turnover, another important indicator of the market, rose to Tk 2.31 billion on the country's prime bourse, which was 67 per cent higher than the previous day's turnover of Tk 1.38 billion.

An analyst, however, said most of investors remained worried about the adverse impact of worsening pandemic situation with looming uncertainty about economic growth and the regulator-enforced floor price system.

He noted that the investors have failed to sell shares of more than two- thirds companies due to the floor price restriction.


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