DSE dragged down by three large-cap stocks
Three heavyweight stocks Grameenphone, Brac Bank and British American Tobacco Bangladesh led the slump in the last one month that saw the prime index of the Dhaka Stock Exchange shed 162 points and lose Tk 11,873 crore.
The three large companies snatched 55.4 points, meaning they accounted for more than one-third the points lost.
Of them, Grameenphone – which is the largest company by market capitalisation – alone caused a loss of 26.67 points on the back of its tussles with the Bangladesh Telecommunication Regulatory Commission.
Other than being declared a significant market power which would slow down its earnings growth, Grameenphone has been ordered to pay Tk 12,579.95 crore in unpaid dues or face its licence being revoked.
When news came out, the telecom company’s stocks fell from Tk 337.1 to Tk 294.7 in just one month.
Grameenphone counts a sizeable number of foreign investors as its shareholders and they mostly offloaded their holdings in the country’s leading mobile operator.
“Foreign investors are nervous due to the frequent intervention of the regulator on the company’s activities, so they sold off,” said Ershad Hossain, chief executive officer of City Bank Capital.
The reason for the selloff of Brac Bank and BATBC stocks is different from Grameenphone’s: the two companies logged in lower earnings in the last two quarters.
Earnings per share (EPS) of BATBC declined to Tk 21.17 in the first half of 2019 from Tk 32.36 a year earlier.
Md Azizur Rahman, company secretary of BATBC, said the company’s earnings fell due to a slump in sales volume of low-segment tobacco products along with a rise in tax.
Meanwhile, the financial sector is not performing well, so there is a confidence crisis among investors -- and Brac Bank, being the largest bank by market capitalisation, suffered.
Brac Bank’s EPS came down to Tk 2.05 in the first half of the year from Tk 2.17 a year earlier.
When the large companies’ stocks fall the overall market feels the tremors as the general investors get panicked, said a top official of a leading stock broker.
Institutional and foreign investors are selling off their stocks as they fear the three companies’ earnings may shrink further.
The DSEX, the benchmark index of the DSE, lost 26.48 points, or 0.52 percent, to close at 5,007.05 yesterday. The index has lost 172 points in the last five trading days.
Turnover, another important indicator of the market, also dropped 10.87 percent to Tk 394.82 crore.
Of the traded issues, 109 advanced and 169 declined with 61 securities closing unchanged on the premier bourse.
