Panic sales send Dhaka stocks to 22-month low

Stocks faced major headwinds on Sunday with the key index of the Dhaka Stock Exchange (DSE) slid into a record 22-month low, as investors went for panic sales.

DSEX, the prime index of the bourse, fell by 69.80 points or 1.32 per cent to settle at 5,212. It has been the lowest level of DSEX in 22 months since January 08, 2017.

Stock market analysts blamed shrinking foreign investment, fear about political turmoil ahead of national elections, coupled with lower participation of institutional investors for the market's falloff.

"Investors were not confident about injecting fresh funds into stocks fearing political uncertainty while countrywide transport strike created panic among investors," said a merchant banker, seeking anonymity.

He noted that the gloomy market outlook kept investors anxious, forcing them to liquidate their holding of shares to avoid further losses, sending the prime index to a record 22-month low.

"Panic sell-offs in the bearish market have triggered the massive correction of indices," said EBL Securities, a brokerage.

After the recent steep fall in index, the Bangladesh Securities and Exchange Commission held an urgent meeting on October 23 to find out the reasons behind the drop-off.

The securities regulator urged investors to stay calm as there is virtually no reason behind the recent sharp fall.

Even the news that the state-run Investment Corporation of Bangladesh (ICB) and the DSE shareholders are set to go for fresh investment soon failed to revive the market sentiment.

ICB will have to invest Tk 15 billion in listed securities of the capital market in accordance with the BSEC directive, from Tk 20 billion bond issue.

When asked, ICB managing director Kazi Sanaul Hoq said they removed the legal complexities over the bond issue. He is optimistic about receiving the fund this week.

He also expressed the hope that the market would turn around and those who would hold on to their shares would gain.

Meanwhile, investors' traffic on the trading floor was thin due to the countrywide transport strike and many investors took part in transactions over the phone.

Bearish sentiment also reflected in the trading activities as turnover on the DSE came down to Tk 3.72 billion, which was 12 per cent lower than the previous session's Tk 4.25 billion.

Of the 339 issues traded on the DSE trading floor, 247 closed lower, 64 issues ended higher and 28 issues remained unchanged.

The ongoing year-end dividend declarations and quarter-end earnings disclosures might have failed to meet the investors' expectation, said a leading broker.

LankaBangla Finance posted negative earnings per share in the third quarter of 2018 after suffering huge losses in its operations in the capital market.

The company's consolidated EPS was Tk 0.24 in the negative for the July-September period, down from Tk 0.90 during the same quarter the year before.

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