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The equity market index faced a major sell-off on Sunday as investors were rattled by yet another global crisis after the US engaged in the ongoing Iran-Israel war.
The United States launched targeted strikes on three Iranian nuclear facilities early Sunday, which has significantly escalated Middle East tensions.
Economists and market insiders warn that Bangladesh, which imports most of its crude oil from the Gulf States, is especially vulnerable. Higher fuel prices feed directly into production costs across the economy -- from manufacturing to agriculture.
Following the latest development, the market opened sharply lower on Sunday, with sellers predominant across the trading floor.
The DSEX, the prime index of the Dhaka Stock Exchange, finally slid nearly 77 points or 1.62 per cent to 4,677. The DSEX lost 100 points while the market cap shed Tk 24 billion in the past two trading days.
The ongoing conflict may drive up the cost of doing business as oil prices are expected to rise further amid the Middle Eastern crisis, said Md Sajedul Islam, managing director at Shyamol Equity Management.
"This is definitely going to have an impact on energy prices and potentially on inflation as well."
Mr Islam also said investors had long been suffering from a severe confidence crisis amid prolonged depressed market outlook; the latest global crisis prompted investors to exit the market.
The intensifying Iran-Israel conflict has created ripples across the globe, affecting economies far removed from the battle zones. Bangladesh is no exception.
While oil prices rise amid instability in the Middle East and key sea routes such as the Suez Canal and Strait of Hormuz become insecure, Bangladesh is confronted with multiple economic stresses.
The global crude oil prices have already climbed on fears of supply disruptions. Brent crude oil surged 1.24 per cent to $77.01 per barrel on Sunday.
The oil prices have already climbed 10 per cent since Israel launched a surprise attack on Iran 10 days back, which could climb toward $130 per barrel in a worst-case scenario, according to JPMorgan, a leading global financial services firm.
Bangladeshi businesses have already expressed concerns, saying the intensifying conflict may pose fresh challenges.
Inflation in Bangladesh may increase further due to the conflict, the Centre for Policy Dialogue (CPD), said at a budget dialogue on Sunday.
"When fuel oil prices increase, it directly impacts inflation," said CPD Executive Director Fahmida Khatun.
The Russia-Ukraine war badly impacted the local economy as well as the stock market. "So, investors are worried that another war may further deteriorate the situation," said Mr Islam.
Price fall of selective blue chip stocks -- BAT Bangladesh, Walton, Al-Arafah Islami Bank and Square Pharma -- dragged the market down. They jointly accounted for a 16-point plunge of the key index.
As many as 28 blue chip stocks out of 30 plunged while the two others remained unchanged.
Subsequently, the blue-chip index, a group of 30 prominent companies, tumbled 24 points to 1,758 while the DSES Index, which represents Shariah-based companies, shed 21 points to 1,016.
Investor participation remained low as the total turnover came down to Tk 2.72 billion, 11 per cent lower from the previous session.
Investors were mostly active in the food sector, which accounted for 22 per cent of Sunday's turnover, followed by the banking sector (16 per cent) and pharma sector (11 per cent).
All sectors faced selling pressure. Among the major sectors, the non-bank financial institutions, food & allied, telecom, banking and engineering sectors took a big hit.
Almost 92 per cent stocks saw price fall as out of the 397 issues traded, 365 declined, 16 managed to close higher and 16 issues remained unchanged on the DSE trading floor.
Lovello Ice-cream was the most-traded stock, with shares worth Tk 196 million changing hands, followed by Beach Hatchery, BRAC Bank, Square Pharma, and Fine Foods.
Low-profile companies dominated the gainers' list, with Stylecraft being the day's best performer, posting a gain of 4.86 per cent, and Prime Finance the worst loser, shedding 10 per cent.
The port city bourse, Chittagong Stock Exchange also tumbled with its CSE All Share Price Index -- CASPI - losing 171 points to 13,099 and the Selective Categories Index -- CSCX -shedding 97 points to 8,097.
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