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Stocks continued their downward trajectory this week, falling below the psychological threshold of 5,000-mark for the first time in four months amid persistent bearish sentiment.
Market analysts said investors had been suffering from a confidence crisis for a long time, while the news of the dissolution of the boards of five crisis-hit Islamic banks exacerbated the market situation.
On Wednesday, the Bangladesh Bank announced the dissolution of the boards of First Security Islami Bank, Social Islami Bank, Union Bank, Global Islami Bank, and Exim Bank, and appointed administrators to formally begin the merger process to create 'Sammilito Islami Bank'. As a result, stocks of these five banks dropped up to 6.2 per cent on the day.
The Dhaka Stock Exchange (DSE) also suspended share trading of the five banks from Thursday as the central bank declared the banks non-viable.
Shareholders of the five Islamic banks feared losing their entire investment, estimated at over Tk 13 billion based on current market prices, as the value of their shares dropped to zero due to significant negative net asset value.
The central bank, however, said in a statement on Thursday that the government may consider compensating small shareholders affected by the merger.
This week, the market experienced broad-based sell-offs as risk-averse investors offloaded holdings to limit potential losses, further deepening the downturn,
"Investor confidence remained subdued due to prevailing regulatory, political, and banking sector uncertainties, particularly surrounding the proposed merger of six Islamic banks," said EBL Securities, in its weekly analysis.
On the Dhaka Stock Exchange (DSE), all five trading days of the week ended in the red. The benchmark DSEX index settled the week 154 points, or 3.01 per cent, lower at 4,968, the lowest level since July 2 this year.
Along with the banking sector uncertainties, negative sentiment continued to prevail amid lingering political worries surrounding the forthcoming national election, said a leading stockbroker.
Price fall of Al-Arafah Islami Bank, Beximco Pharma, Orion Infusion, Khan Brother PP Woven bag Industries, Islami Bank, BAT Bangladesh and Renata, largely dragged the market index down. These seven stocks accounted for a 35-point fall in the DSEX.
The blue-chip DS30 index, a group of 30 prominent companies, also lost 47 points to close at 1,940 while the DSES index, which represents Shariah-based companies, dropped 43 points to 1,039.
Market liquidity continued to remain subdued despite a slight uptick of total weekly turnover to Tk 24.22 billion this week, up from Tk 22.86 billion in the week before.
Accordingly, the average daily turnover stood at Tk 4.84 billion, up 6 per cent from the previous week's average turnover of Tk 4.57 billion.
Investors were mostly active in the engineering sector, which accounted for 13.3 per cent of the week's total turnover, followed by pharma (12.3 per cent) and textile sector (9.8 per cent).
More than 87 per cent traded shares saw price erosion this week. Of 389 issues traded, 340 saw price correction while 40 others gained and 9 issues remained unchanged on the DSE floor.
All the major sectors showed negative performance. The non-bank financial institutions sector witnessed the highest loss of 7 per cent, followed by power, engineering, food, banking and telecom sectors.
Anwar Galvanizing became the most-traded stocks, with shares worth Tk 1.21 billion changing hands, closely followed by Summit Alliance Port, Monospool Bangladesh, Orion Infusions and Khan Brothers PP Woven Bag Industries.
The Chittagong Stock Exchange also ended sharply lower, with its All Shares Price Index (CASPI) shedding 328 points to close at 13,958, while the Selective Categories Index (CSCX) lost 198 points to 8,615.
The port city bourse traded 14.40 million shares and mutual fund units with turnover value of Tk 972 million.
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