Stock investors at wits' end
Anguished by the freefall of the stock market over the past month, general investors yesterday staged demonstrations in front of the Dhaka bourse.
Since March 3, the first trading of the month, DSEX, the benchmark index of the Dhaka Stock Exchange, shed about 400 points, or 7 percent, to close at 5,318.75 points yesterday.
On March 28, Finance Minister AHM Mustafa Kamal urged stock investors not to panic, going so far as to assuring them that they will not lose their money.
Since his rhetoric, DSE lost 14,537.22 crore, or 3.53 percent, in market capitalisation. The benchmark index of the premier bourse also shed about 187 points.
Now, fund managers and general investors are puzzled seeing no action from the government and the regulator in stemming the slide.
“Who are rushing to sell their shares in such a bear market,” asked Md Sourov Hossain, a general investor, at the demonstration.
He went on to urge the Bangladesh Securities and Exchange Commission to investigate for foul play.
The recent market fall is lead by some big companies and hence the jitters, Hossain added.
For instance, yesterday heavyweight stocks United Power Generation and Grameenphone lost 24.35 points and 21.86 points respectively.
Market analysts said the telecom regulator's tough stance against Grameenphone caused its share price to slide in the last few days, but United Power Generation's plunge is baffling as there is no price-sensitive news coming out from the power plant.
Earlier in February, the telecom regulator declared Grameenphone a Significant Market Power operator and slapped restrictions on its business strategy.
Banks' huge liquidity crunch is also impacting the capital market negatively, said a top official of a leading merchant bank.
“Liquidity crisis is a big problem that breeds higher interest rate on deposits and pushes investors to the banking sector from the stock market,” said Shakil Rizvi, president of the DSE Brokers' Association.
Another reason for the slide is lower confidence among investors thanks to poor performance of listed stocks and listing of poor companies through initial public offerings (IPOs).
“We don't want to stop IPOs but we want good stocks through IPOs.”
When good companies get listed investor confidence will come back, he added.
The institutional investors, which tend to be banks, are battling liquidity pressure as well as capital market exposure ceiling, said Mohammed Nasir Uddin Chowdhury, president of Bangladesh Merchant Bankers' Association.
For market exposure, the bank and financial institutional investors demanded the cost price of their investment to be taken into account, while the central bank prefers using the market price.
“The exposure issues should be solved soon for the sake of the market,” he said, while suggesting giving the go-ahead to institutional investors to issue bonds and not to consider the instruments as their market exposure.
Meanwhile, DSEX yesterday continued its dive, shedding 53.48 points to finish the day at 5,318.75.
Turnover, another important indicator, increased 12.46 percent to Tk 418 crore, with 7.64 crore shares and mutual fund units changing hands on the DSE floor.
Of the traded issues, 57 advanced, 231 declined and 59 closed unchanged on the DSE.
The debutant Esquire Knit Composite dominated the turnover chart with its transaction of 67.83 lakh shares worth Tk 32.80 crore, followed by United Power Generation, British American Tobacco Bangladesh, Eastern Cables and Grameenphone.
Chittagong stocks closed low, with the bourse's benchmark index, CSCX, declining 99.53 points, or 0.99 percent, to finish the day at 9,879.24.
Losers beat gainers as 162 declined, 52 advanced and 21 unchanged on the Chittagong Stock Exchange.
