Key index falls to one-month low, with investors rattled by BSEC drama

The benchmark index of the Dhaka bourse plummeted to one-month low on Sunday as jittery investors sold off their holdings amid tension within the securities regulator.

Market operators said the tussle between the top brass of the Bangladesh Securities and Exchange Commission (BSEC) and other officials, centering on the forced retirement of an executive director, impacted investor sentiment negatively.

Although BSEC officials resumed work on Sunday after observing work abstention last Thursday, investors were reluctant to make fresh investments.

Sellers remained on the dominant side right from the start, with jittery investors staying cautious amid an uncertain market momentum.

The DSEX, key index of the Dhaka Stock Exchange (DSE), finally went down nearly 30 points or 0.56 per cent to settle at 5,174, lowest since February 10.

Investors were looking for clear steps from the Ministry of Finance. "But that has remained somewhat elusive so far," said EBL Securities, in its regular market analysis.

Investors mostly preferred to take a wait-and-see approach and stay on the sidelines, considering the weakening strength of the market's trend, added the stockbroker.

Many investors were asking why they would suffer amid a tussle between the BSEC top brass and officials.

"We are looking forward to hearing an end to the tension for a vibrant and stable capital market," said Aminul Islam, an investor at a leading brokerage firm.

Last Wednesday, some unruly BSEC officials held Chairman Khandkar Rashed Maqsood and three commissioners hostage for nearly four hours following forced retirement of an executive director. The situation was brought under control after army personnel intervened and rescued them.

Aggrieved officials observed work abstention on Thursday, demanding the resignation of the chairman and the commissioners allegedly for their inefficiency.

As a result, BSEC's operations remained halted on Thursday. However, on returning to office around 3:00pm that day the BSEC chief told reporters that they would not bow to any pressure and that they had full support from the government in continuing their work against corruption.

The chairman's bodyguard, Ashiqur Rahman filed a case over Wednesday's incident, accusing 16 BSEC officials. Most officials returned to work on Sunday, except for the 16 accused.

The ongoing volatile situation may have further negative impacts on the market, which is unwanted, said Muhammad Nazrul Islam, secretary general of the Bangladesh Merchant Bankers Association, in a statement on Thursday.

"Many investors are turning away from the market after losing capital, and market intermediaries are also in crisis," said the BMBA.

Meanwhile, market stakeholders, including leaders of the DSE, Chittagong Stock Exchange and the Brokers Association of Bangladesh (DBA) held a meeting with the BSEC chairman on Sunday.

The stakeholders suggested that the tension be cooled off in the greater interest of the capital market.

The blue-chip DS30 index, a group of 30 prominent companies, lost more than 9 points to close at 1,880 on Sunday, while the DSES index, which represents Shariah-based companies, shed 4 points to 1,156.

Price fall of selective large-cap stocks, such as Islami Bank, BAT Bangladesh, United Commercial Bank, Prime Bank, Pubali bank and Alif Industries dragged the market down. They jointly accounted for a 10-point drop of the key index.

Turnover, a crucial indicator of the market, fell 5 per cent to Tk 3.37 billion on Sunday.

Investors were mostly active in pharmaceutical stocks, which accounted for 18 per cent of the day's total turnover, followed by the textile sector (16 per cent) and banking (10 per cent).

All the major sectors closed in the red. The non-bank financial institution sector faced the highest correction, losing 1.2 per cent, followed by engineering, food, banking, telecommunication and pharma.

Orion Infusion was the most-traded stock, with shares worth Tk 180 million changing hands, followed by Alif Industries, Linde Bangladesh, Beach Hatchery, and Fareast Knitting.

The Chittagong Stock Exchange (CSE) also ended lower, with CSE All Share Price Index (CASPI) losing 43 points to 14,459 while its Selective Categories Index (CSCX) lost 25 points to 8,769.

babulfexpress@gmail.com