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The benchmark index of the Dhaka Stock Exchange (DSE) tumbled this week, snapping a two-week gaining streak, as the move to liquidate nine scam-tainted non-bank financial institutions (NBFIs) unnerved investors.
The Bangladesh Bank officially approved the liquidation this week as the these NBFIs -- plagued by years of irregularities, loan fraud and severe liquidity shortages during the previous regime -failed to repay depositors.
Market analysts said investor sentiment was already fragile following the merger of five banks, which had left retail investors on edge. Now, the fresh liquidation move added to the unease, prompting a wave of selling pressure across the market.
Eight of the nine NBFIs selected for liquidation are publicly listed. They are FAS Finance, Bangladesh Industrial Finance, Premier Leasing, Fareast Finance, GSP Finance, Prime Finance, People's Leasing and International Leasing.
All emerged as the week's worst performers, plunging between 28 percent and 40 percent as panicked investors rushed to offload shares.
"Stocks faced broad-based sell-offs as worsening sentiment dragged most sectors into the red, as uncertainties surrounding the ongoing financial sector restructuring weigh heavily on the market," said a leading stockbroker.
Moreover, newly enacted margin rules and heightened political tensions further dampened confidence, prompting jittery investors to scale back their investment exposure in an attempt to protect already strained portfolios, he added.
As a result, the market's recent recovery lost momentum, with deepening political and financial sector uncertainty pushing the index into a sharp downward spiral.
This week, the market ended four sessions lower while only one session managed to close higher, with market liquidity continuing to remain tightened.
The prime DSEX index finally settled the week 142 points or 2.86 percent lower at 4,886, after recovering 325 points in the past two consecutive weeks.
The blue-chip DS30 index, a group of 30 prominent companies, also plunged 42 points to close at 1,892 while the DSES index, which represents Shariah-based companies, dropped 32 points to 1,025.
EBL Securities, in its weekly market analysis, said stocks failed to sustain recovery momentum after trending in positive territory in the prior two weeks, weighed down by investor concerns over political uncertainties and ongoing financial sector restructuring, which prompted a cautious stance among market participants.
"The week began on a dismal note, with predominant selling pressure as cautious investors remained observant of the market's trend while awaiting clearer signals on the country's political front".
Although bargain hunters tried to stage a recovery in the middle of the week, the momentum faded amid no major positive catalyst for the market's recovery, finally pushing the market indices into deep red, said the stockbroker.
Price fall of blue-chip stocks, including Islami Bank, Square Pharma, LafargeHolcim, Walton and Padma Oil, largely contributed to the market index plunge. These five stocks accounted for a 21-point drop in the DSEX.
The market liquidity continued to remain tightened as the total turnover came down to Tk 20.57 billion as against Tk 26.26 billion in the week before.
Accordingly, the average daily turnover stood at Tk 4.11 billion, down almost 22 per cent from the previous week's average turnover of Tk 5.25 billion.
Investors were mostly active in the textile sector, which accounted for 15 per cent of the week's total turnover, followed by engineering (13.7 per cent) and pharma sector (10.3 per cent).
Losers outnumbered the gainers, as out of 383 issues traded, 325 saw price fall while 45 others ended higher and 13 issues remained unchanged on the DSE floor.
All the major sectors showed negative performance. The non-bank financial institutions posted the highest loss of 7 per cent, followed by power, food, engineering, banking, pharma and telecom.
Low-cap companies dominated the weekly turnover list with Simtex Industries becoming the most-traded stocks, with shares worth Tk 940 million changing hands, closely followed by Khan Brothers PP Woven Bag Industries, Dominage Steels, Orion Infusion and Lovello Ice-cream.
The Chittagong Stock Exchange also ended lower, with its All Shares Price Index (CASPI) losing 290 points to close at 13,747, while the Selective Categories Index (CSCX) dropped 169 points to 8,473.
The port city bourse traded 13.56 million shares and mutual fund units with turnover value of Tk 577 million.
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