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Weekly analysis: Bearish spell continues for third straight week

DSEX sheds 299 points in three weeks as investors move to sidelines


Babul Barman | Published: July 20, 2019 10:33:20 | Updated: July 22, 2019 10:34:09


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Stocks witnessed yet another bearish week that ended on Thursday, extending the losing streak for the third straight week, as most investors moved to the sidelines, demonstrating low level of confidence in the market.

Market analysts said the government's move to liquidate People's Leasing and Financial Services (PLFS) and the GP issue took toll on the investor sentiment.

Week on week, DSEX, the prime index of the Dhaka Stock Exchange (DSE), plunged 91.6 points or 1.75 per cent to settle at 5,130.

In the past three consecutive weeks, the DSEX wiped off a total of 299 points or 5.5 per cent.

Enraged by the continuous fall, a group of retail investors staged demonstrations in front of the DSE building throughout the week.

The aggrieved investors also handed over a memorandum to the Prime Minister's Office on Thursday with a call for government initiatives to revive the market.

An analyst at a leading broker firm said, "Investors sold their shares following PLFSL's liquidation move as they feared some other companies in the financial sector might face the same fate due to their weak business performance."

Khairul Bashar Abu Taher Mohammed, secretary general of the Bangladesh Merchant Bankers Association (BMBA), said the investors are already grappling with several issues, such as - imposition of extra tax on listed companies, the GP's clash with the telecom regulator, and the latest gas price hike.

The PLFSL's liquidation news accelerated the market fall, he added.

Mr Bashar, also CEO of the MTB Capital, said that institutional investors maintained a cautious stance due to liquidity crunch.

AB Mirza Azizul Islam, former advisor to a caretaker government, said the stock investors were not happy with the budgetary measures, as there is no incentive for them. Rather, the listed companies are being burdened with more tax.

Mr Islam, also a former chairman of the stock market regulator, said good companies might face problems due to imposition of 10 per cent extra tax on stock dividend in case of expansion.

He stressed the need for bringing more reputed and good companies to the market in order to lift investor confidence.

The outgoing week saw five trading days as usual. Of them, three sessions closed lower while two others posted marginal gain.

The two other indices also ended lower. The DS30 index, comprising blue chips, fell 28.13 points to finish at 1,829 and the DSE Shariah Index lost 17.46 points to close at 1,176.

International Leasing said stocks continued to bleed, hitting a 30-month low during the week as the panic-driven investors continued to sell shares due to lack of confidence.

The shaky investors adopted a cautious stance but some smart investors showed buying interest after the approval of new public issue rules, said the stockbroker.

The total turnover on the prime bourse stood at Tk 16.36 billion, down from Tk 21.12 billion in the week before.

The daily turnover averaged out at Tk 3.27 billion, registering a decline of nearly 23 per cent over the previous week's average of Tk 4.22 billion.

The market capitalisation of the DSE also came down 1.12 per cent to Tk 3,822 billion on Thursday from Tk 3,866 billion in the week before.

Block trade contributed 2.6 per cent to the total week's total turnover where stocks like Fortune Shoes, Beacon Pharma, BRAC Bank, GP and Square Pharma Beximco dominated the block trade board.

Losers outnumbers the gainers, as out of 354 issues traded, 273 closed lower, 66 ended higher and 15 issues remained unchanged on the DSE floor.

Fortune Shoes dominated the week's turnover chart, with 25.19 million shares worth Tk 965 million changing hands. The company accounted for 5.89 per cent of the week's total turnover.

SEML FBLSL Growth Fund was the week's best performer, posting a gain of 57.95 per cent while BIFC was the worst loser, plunging by 34.09 per cent.

The port city bourse, Chittagong Stock Exchange (CSE), also ended lower, with its CSE All Share Price Index - CASPI -shedding 248 points to settle at 15,724 and the Selective Categories Index - CSCX - plunging 143 points to finish the week at 9,558.

A new issue - Sea Pearl Beach Resort & Spa -- made trading debut on Tuesday last. The newcomer's share soared 262 per cent to close at Tk 36.20 each on Thursday.

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