Stocks return to negative zone as investors resume sell-offs

Dhaka stocks dropped again on Monday with a fall in share prices of almost two-thirds of the traded scrips as investors, panicked by the falling trend at the market, resumed share selling to avoid further losses. DSEX, the key index of Dhaka Stock Exchange, lost 0.31 per cent, or 16.91 points, to close at 5,309.47 points on Monday after gaining 64.78 points in the previous session.

Before Thursday’s gain, DSEX lost 203 points in four sessions. The market began with positive momentum as some of the institutional investors including Investment Corporation of Bangladesh continued buying shares to revive the investors’ confidence on the market, market operators said.

But the institutional investors’ efforts failed amid huge selling pressure from retail investors, they said. The key index finished the session in the negative trajectory again as the panicked investors felt it safe to withdraw their funds before further losses, they said.

Market experts said investors’ confidence was shattered by a number of issues including lack of regulatory measures against fraudsters and manipulators, listing fundamentally weak companies with significant number of placement shares, directors share sales in the public market and unregulated corporate declarations with huge bonus dividends.

The volatility at the market began with the liquidity shortage in the financial sector, which was worsened by the Grameenphone’s tussle with the telecom regulator over Tk 12,500 crore in dues.

Investors were caught off guard by the relentless fall, shedding 640 points in last three and a half months, causing the daily turnover remaining below Tk 300 crore. Of the 345 issues traded at DSE on Monday, 193 declined, 107 advanced and 41 remained unchanged.

The average share prices of non-bank financial institutions, pharmaceuticals, textiles and bank sectors dropped by 1.66 per cent, 0.60 per cent, 0.58 per cent and 0.2 per cent respectively. The turnover on the bourse increased slightly to Tk 296.02 crore on Monday from that of Tk 284.18 crore in the previous trading session due to selling pressure.

Bangladesh Securities and Exchange Commission chairman M Khairul Hossain on Monday held a meeting with DSE officials and discussed ways how to check the current volatility at the market. At the meeting, DSE officials mentioned some requirements including barring rampant issuance of placement shares for the betterment of the market.

Khairul assured them that their proposals would be sincerely assessed for the interest of the market. DSE may send proposals on a number of issues with giving priority to rectifying pre-IPO placement shares rules.

The share prices of all the traded ‘Z’ category scrips except two increased on the day amid speculations that the market regulator would not delist companies from the ‘Z’ category rather it would force companies to restructure their boards to improve their business, market operators said.

The media reported that Bangladesh Securities and Exchange Commission formed a committee and asked it to prepare necessary proposals on a notification regarding reconstitution of boards of companies remaining in the ‘Z’ category in the stock exchanges for more than a year.

The share prices of Grameenphone advanced by 2.7 per cent for the second day on Monday after a seven-day fall as some institutional investors continued bargain hunting targeting the mobile operator’s shares. The GP’s gain contributed 21 points positive to the DSEX, saving it from a significant fall.

‘Though the prime index opened positive, it started falling down after thirty minutes of trading as risk averse investors went on selling stocks fearing further fall,’ said EBL Securities in its daily market commentary.

DSE blue-chip index DS30 also shed 0.08 per cent, or 1.62 points, to close at 1,901.35 points. Shariah index DSES dipped by 0.35 per cent, or 4.42 points, to finish at 1,228.79 points. Fortune Shoes led the chart of turnover leaders with its shares worth Tk 19.66 crore changing hands on the day.

Monno Ceramic Industries, Bangladesh Submarine Cable Company, United Power Generation Company, Square Pharmaceuticals, Esquire Knit Composite, Libra Infusions, Grameenphone, Monno Jute Stafflers and Eastern Cables were the other turnover leaders.
Asia Insurance gained the most on the day with a 5.34-per cent increase in its share prices while Islamic Finance & Investment was the worst loser, shedding 11.60 per cent.
Source: http://www.newagebd.net

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