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The Financial Express

Weekly review: Stocks tumble despite new circuit breaker

Babul Barman | Published: March 21, 2020 12:16:33 | Updated: March 23, 2020 11:28:42


Weekly review: Stocks tumble despite new circuit breaker

The capital market passed a chaotic week as securities regulator imposed new circuit breaker.

The bourses also decided to cut an hour trading time to minimize the losses due to free-fall of stock prices. Now, trading will be held between 10:30am to 1:30pm from Sunday until further notice.

Despite this news, stocks tumbled further last week as jittery investors dumped their holdings in the first three sessions of the week amid mounting fears over coronavirus outbreak.

DSEX, the key index of the Dhaka Stock Exchange, went down by 155 points or 3.75 per cent to settle at 3,975, as last session's 371 points gain failed to recover the previous three days' free-fall.

The key index lost 1,165 points, wiping out market capitalisation of Tk 698 billion in a month until Wednesday as the pandemic wreaked havoc on stocks.

The DSEX also lost 279 points on March 9, the biggest single-day fall since its inception in 2013, a day after Bangladesh confirmed three cases of Covid-19, the disease caused by new coronavirus.

However, stocks rebounded strongly on the last session of the week, snapping a four-day losing streak, as the securities regulator imposed new circuit breaker to salvage the ailing capital market.

The outgoing week saw four trading days as the market remained closed on Tuesday due to Birthday of Father of the Nation.

Of them, first three sessions lost 526 points while last session jumped 371 points in 30 minutes trading period as the regulator imposed circuit breaker to curb free-fall.

Under the new circuit breaker system, price of no security will be allowed to hit below its average closing price of five preceding days.

The BSEC move comes following directions from the government in the interest of investors and for the development of securities market. It will remain in force until further notice, BSEC said.

Market analysts said the market witnessed a massive reversal and key index jumped 371 points on Thursday with the change in regulation, which prevent the massive fall.

Experts hailed the securities regulator's move, saying not only Bangladesh, many countries also took such intervention to curb the panic sell-off.

Deepening fears about the outbreak of the coronavirus sent investors scrambling during the week as Bangladesh reported first death of coronavirus infection on Wednesday.

Coronavirus has put the world in a kind of lockdown situation as many countries put restrictions on travel, fuelling fears of a global economic recession, said a merchant banker.

The new virus continued spreading outside China, disrupting global supply chain, export and import activities.

He noted that the coronavirus outbreak will affect the economy in terms of cost escalation, demand slowdown, and job losses if the pandemic sustained for a long period.

The coronavirus is affecting almost all the listed companies due to the shortage of raw materials that come from external sources, including China, he said.

This will hurt earnings of the companies, he added.

Two other indices also ended lower. The DS30 index, comprising blue chips, fell 55.78 points to finish at 1,325 and the DSE Shariah Index lost 38.35 points to close at 919.

The weekly total turnover on the DSE stood at Tk 12.58 billion, down from Tk 20.88 billion in the week before, as last week saw four trading days.

The daily turnover averaged Tk 3.14 billion, down nearly 25 per cent from the previous week's average of Tk 4.18 billion.

The market capitalisation of the DSE fell sharply by 3.31 per cent to Tk 3,107 billion on Thursday, from Tk 3,213 billion in the previous week.

Prices of 85 per cent traded issues fell last week, as out of 358 issues traded, 304 closed lower and 45 higher while nine issues remained unchanged on the DSE floor.

Square Pharma dominated the week's turnover chart with shares worth Tk 531 million changing hands.

Monno Ceramic was the week's best performer, posting a gain of 7.27 per cent while the BIFC was the worst loser, losing 28.57 per cent.

The Chittagong Stock Exchange (CSE) also extended losses with its CSE All Share Price Index - CASPI - tumbling 1,509 points to settle at 11,134 and the Selective Categories Index - CSCX - losing 915 points to close at 6,746.

The CASPI-lost 170 points and the CSCX -shed 105 points Thursday as trading of 71 companies failed to follow the newly introduced circuit breaker rules.

CSE officials said they will cancel Thursday's 71 companies' trade.

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