Dhaka stocks crash to its lowest in five years
Dhaka stocks plunged to its five-year low yesterday amid coronavirus-induced sell-off as fears grew that the fast-spreading disease would hurt both global and local economies and the earnings of listed companies.
DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), lost 160.64 points, or 3.88 %, to close the day at 3,969.31 -- the cheapest since May 4, 2015, when the market ended at 3,959.73.
With the slide, the index slipped below the 4,000-mark for the first time in five years. On March 9, DSEX plunged 279.32 points.
The value of the stocks shed 7.95 % to Tk 311,113 crore in a span of 11 trading days this month. Turnover, another important indicator of the market, dropped 8.7 per cent to Tk 396.9 crore yesterday.
"Investors are panicking owing to the recent fall, so many of them sold off shares," said Mostaq Ahmed Sadeque, a former president of the Dhaka STOCK MARKET Brokers Association.
Yesterday, a group of investors urged the bourse to avoid trading so that you can halt the massive fall and present some relief to nervous investors.
On Saturday, the federal government confirmed that two more Bangladeshis tested positive for coronavirus, raising the tally to five.
The World Health Organisation on Wednesday declared the novel coronavirus outbreak a pandemic. The number of coronavirus cases all over the world totalled a lot more than 156,400, according to data from Johns Hopkins University, with 5,833 deaths.
The virus has found a foothold on every continent aside from Antarctica, spreading to 142 countries and territories up to now.
"The coronavirus influenced stock markets worldwide and local stock investors fear that it could hamper the economy and hammer the wages of the listed companies," said Sadeque, also the managing director of Investment Promotion of Services, a brokerage house.
Banks have started to inject funds available in the market by firmly taking loans from the Bangladesh Bank under a particular package used to prop up the ailing market. The move had lifted the mood of investor somewhat. However the positive sentiment was short-lived when confronted with growing risk of coronavirus, Sadeque added.
Eight banks mobilised funds to purchase the stock market beneath the special package and three more banks are set to check out suit this week.
On February 10, the central bank announced a package for banks, permitting them to create funds worth Tk 200 crore each on the back of the financial support.
The lenders will need the fund from the central bank through repurchase agreements against treasury bills and bonds owned by them. The banks must pay 5 per cent interest for the fund and the credit tenure will be until February 2025.
The Bangladesh Merchant Bankers Association (BMBA) yesterday sat with the BB higher ups at a gathering at the central bank headquarters in Dhaka. BB Governor Fazle Kabir chaired the meeting.
"The central bank is candid about increasing liquidity to the stock market and it is working. Now the stock index is certainly going down which is maybe as a result of coronavirus," Md Sayadur Rahman, president of the association, said.
The BMBA met with the governor as several banks have not create the fund yet.
The central bank announced the package to improve the morale of investors. Following the assistance was unveiled, the benchmark index edged up. However, it began to fall again last week when three tested positive for the virus in that which was the first incidence of the lethal, pneumonia-like virus in Bangladesh.
