Many of the worst-performing companies have outpaced market leaders in price gains in the secondary market over the past four months, as investors focus on short-term returns amid limited investment options.
Apart from retailers, many institutional investors have not fixed any long-term investment strategy amid the liquidity crisis.
Ahead of the national election held on February 12, investors had been uncertain about the future market direction. After the election, investors' expectations regarding market stability faded as the US and Israel jointly struck Iran and waged war at the end of February.
As a result, the market outlook has become elusive, and investors remain fixated on speculative stocks in the hope of short-term gains.
This is the backdrop in which Dominage Steel Building Systems, despite a significantly negative P/E (price-to-earnings) ratio and one of its factories being shut, has continued its rally on the stock exchanges.
Dominage Steel registered a 131 per cent market price appreciation as of Thursday since January 1, while well-performing multinational company Linde BD experienced a 14.5 per cent decline during the period.
The board of Dominage Steel Building Systems last week disseminated price-sensitive information regarding the sale of their ownership stakes to Akij Resources and two individuals.
Some market operators said insiders, who were aware of the company's intention to sell ownership to the Akij conglomerate, might have played a role in the company's rally.
The rally of Dominage Steel does not reflect any fundamental strength.
Of the other non-performing companies that outperformed market leaders on the bourses, BBS Cables experienced a 30.3 per cent appreciation over the last four months.
The company distributed no dividends and reported a loss of Tk 856 million in FY25, increased from a loss of Tk 133 million in FY24. It has remained in the red in the last three quarters too.
The unjustified rally of BBS Cables, along with other non-performing companies, indicates that investors are hooked on short-term gains from speculative stocks.
Md. Ashequr Rahman, managing director of Midway Securities, said some groups had influenced the rallies of speculative stocks for short-term gains.
The financial performance of some of the companies that have seen a rally is better than that of other poor performers, but that is insignificant compared to blue-chip stocks that experienced correction.
"The absence of any new IPO is another reason why the secondary market has lost its buoyancy," Mr Rahman added.
The country's capital market has seen no new listings since March 2024.
The latest conflict between Iran and the US-Israel alliance disrupted fuel supply through the blockade of the Strait of Hormuz.
Local manufacturers said their profitability would be seriously affected due to the abrupt rise in production costs induced by fuel price hikes.
Apprehension over profit decline has been reflected in stock movements.
For example, the stock price of Unilever Consumer Care closed at Tk 2,163.6 each on April 6, which fell further to Tk 2,065.80 by Thursday.
Meanwhile, the stock price of ACI fell to Tk 193.80 each share on Thursday, which was Tk 211.6 on April 15.
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