Stocks plunge amid growing political concerns

Stocks suffered a big jolt this week, extending the losing streak to third straight week, as the key index of the Dhaka bourse plunged to a six-month low amid mounting concerns over political instability.

Market analysts pointed to growing political unrest surrounding the upcoming national elections and the announcement of date for the verdict in the case against ousted prime minister Sheikh Hasina and her top aides as key factors contributing to the heightened anxiety.

The uncertainty has left investors jittery, with many fearing that the situation could worsen, further affecting the already struggling market.

On Thursday, the benchmark index of the Dhaka Stock Exchange (DSE) experienced its biggest single-day drop in over six months, as fears of a potential 'lockdown' triggered panic sales.

Salim Afzal Shawon, head of research at BRAC EPL Stock Brokerage, explained that the heightened political uncertainty prompted fearful investors to engage in heavy sell-offs.

In addition to the political unrest, he noted that new compliance requirements under the revised margin rules, coupled with post-record date price adjustments in several large companies, have further weighed on market sentiment.

However, he said, the market plunge was an overreaction by investors.

The Bangladesh Securities and Exchange Commission (BSEC) introduced the new margin and mutual fund rules this week in an effort to bring more discipline to the market.

This week, the market saw broad-based sell-offs in four out of five sessions, as nervous investors sought to limit further losses in their already struggling portfolios by reducing exposure to the market's ailing momentum.

The benchmark DSEX index of the Dhaka Stock Exchange (DSE) settled the week 265 points, or 5.34 per cent, lower at 4,703, the lowest level since June 23 this year.

Over the past three consecutive weeks, the DSEX has lost 409 points, while the market capitalisation of the prime bourse has shrunk by Tk 313 billion.

EBL Securities, in its weekly market analysis, said stocks suffered the brunt of intense bearish sentiment, as the market failed to earn any breather for the market participants as the lingering anxiety over the newly enacted margin rules and prevailing political developments weighed on market sentiment.

The market succumbed to relentless sell pressures as panic-stricken investors dumped stocks rendered non-marginable under the new law, sparking a broad-based sell-off across the trading floor, said the stockbroker.

Price fall of Islami Bank, Beximco Pharma, LafargeHolcim Bangladesh, Renata, and BRAC Bank, largely dragged the market index down. These five stocks accounted for a 47-point fall in the DSEX.

The blue-chip DS30 index, a group of 30 prominent companies, also lost 89 points to close at 1,851 while the DSES index, which represents Shariah-based companies, dropped 62 points to 977.

Market liquidity continued to remain subdued as the weekly turnover stood at Tk 17.72 billion, down from Tk 24.22 billion in the week before.

Accordingly, the average daily turnover dropped to Tk 3.54 billion, down 27 per cent from the previous week's average turnover of Tk 4.84 billion.

Investors were mostly active in the engineering sector, which accounted for 14 per cent of the week's total turnover, followed by pharma (13 per cent) and textile sector (9.5 per cent).

Almost 95 per cent traded shares saw price erosion this week. Of 383 issues traded, 363 saw price correction while 17 gained and 3 others remained unchanged on the DSE floor.

All the major sectors showed negative performance. The non-bank financial institutions sector witnessed the highest loss of 10.7 per cent, followed by engineering, food, power, banking, pharma and telecom sectors.

Summit Alliance Port became the most-traded stocks, with shares worth Tk 970 million changing hands, closely followed by Anwar Galvanizing, Orion Infusions, Simtex Industries and Bangladesh Shipping Corporation.

The Chittagong Stock Exchange also ended sharply lower, with its All Shares Price Index (CASPI) shedding 557 points to close at 13,401, while the Selective Categories Index (CSCX) lost 296 points to 8,319.

The port city bourse traded 9.88 million shares and mutual fund units with turnover value of Tk 803 million.

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