Stocks plunge for 3rd week on panic sales

Dhaka stocks plunged in last week, the third week in a row, in cautious trading as the investors’ concerns over the volatile market intensified amid the People’s Leasing and Financial Services (PLFS) liquidation move.

The government’s move to wind up the struggling non-bank financial institution hit hard the investors’ sentiment, market operators said.

They said the move spread panic across the market as investors anticipated that more financial companies might face liquidation considering their fragile state.

DSEX, the key index of Dhaka Stock Exchange, slumped by 1.75 per cent, or 91.60 points, over the week to close at 5,130.70 points on Thursday, the last trading session of the week.

The DSEX lost 299.36 points in last three weeks.

In line with the previous week, the market fell on the first day of the week and the sell-offs intensified on the second day, Monday, as panic stricken investors went on selling shares amid rising concerns over the country’s financial sector including the capital market.

The market, however, gained slightly on Tuesday and Wednesday in last week as a section of institutional investors came forward to support the market to halt the relentless fall in share prices, market operators said.

They said the market returned to the negative zone on Thursday as institutional support failed to offset the impact of sell-offs by other investors.

In last week most of the investors preferred to be on  the sidelines to observe the next move of the market, they said.

Therefore, the daily average turnover on DSE plunged to Tk 327.35 crore in last week from Tk 422.57 crore in the previous week.

The media reported that the High Court on July 14 accepted the prayer of Bangladesh Bank for PLFS’ liquidation for hearing and the court also appointed BB deputy general manager Md Asaduzzaman Khan as provisional liquidator of PLFS.

The DSE and the Chittagong Stock Exchange suspended trading of the shares of PLFS from July 14.

Apart from the PLFS, four more non-bank financial institutions — International Leasing and Financial Services, FAS Finance and Investment, Bangladesh Industrial Finance and Prime Finance — became defaulters as they could not pay back loans to their clients and were struggling to pay depositors’ money, they media reported on Monday.

Besides the PLFS woes, investors have been grappling with the a host of other issues including penalty tax on listed companies, gas price hike and Grameenphone tussle with Bangladesh Telecommunication Regulatory Commission over unpaid audit claim.

The DSEX lost 291 points so far in July.

EBL Securities in its weekly market commentary said, ‘The capital bourse of the country extended the losing streak for the third consecutive week due to indecisiveness and lack of confidence among the investors.’

Share prices of all the large capitalised sectors dropped in the week. Average share prices of NBFI, textile, bank and telecommunication sectors decreased by 4.0 per cent, 2.3 per cent, 0.8 per cent and 0.7 per cent respectively.

A section of investors held rally on every trading day in last week, protesting against the plunge in share prices. They sought prime minister Sheikh Hasina’s intervention in the issue.

The affected investors blamed market regulator Bangladesh Securities and Exchange Commission for the current situation at the market and demanded an immediate resignation of its chairman M Khairul Hossain and overhaul of the commission.

The BSEC on July 15 tightened the public issue rules, raising initial public offering quota facility for the general investors and barring mutual funds from stock dividend declaration that might lessen sell-offs.

Out of the 354 issues traded in the week, 273 declined, 66 advanced and 15 remained unchanged.

DS30, the blue-chip index of DSE, lost 1.51 per cent, 28.13 points, to close at 1,829.58 points.

Shariah index DSES shed 1.55 per cent, or 18.46 points, to finish at 1,176.14 points.

Fortune Shoes led the turnover chart with its shares worth Tk 96.47 crore changing hands in the week.

United Power Generation Company, Grameenphone, Sinobangla Industries, Federal Insurance, Sea Pearl Beach Resort, National Life Insurance Company, Beacon Pharmaceuticals, Monno Ceramic Industries and Dhaka Insurance were the other turnover leaders.

SEML FBLSL Growth Fund gained the most in the week with a 57.95-per cent increase in its unit prices while Bangladesh Industrial Finance was the worst loser, shedding 34.09 per cent.