Stocks bleed as uncertainty deepens

Stocks in Bangladesh dropped for the third consecutive day yesterday as investors were largely inactive amid deepening uncertainty caused by the sharp deterioration in a number of macroeconomic indicators. 

Shares on the Dhaka Stock Exchange (DSE) and the Chittagong Stock Exchange (CSE) have been under strain since the beginning of the Russian war in Ukraine in February as the global energy crisis sent inflation higher at home and abroad, intensified the economic crisis, and threaten to hurt the incomes of listed firms. 

But in recent weeks, uncertainty has deepened as the war escalated, the fear of a global recession has grown, a potential global food crisis looms large, and electricity shortages in Bangladesh have worsened, battering the confidence of investors.

Yesterday, the DSEX, the benchmark index of the DSE, plummeted 65 points, or 1.01 per cent, to close at 6,413 points.

The DS30, the index that consists of blue-chip companies, was down 0.93 per cent to 2,277, while the DSES, the Shariah-complaint index, gave up 0.80 per cent at 1,406.

On the DSE, only 26 stocks advanced while 153 retreated and 182 did not see any movement.

Investors panicked as the fear of a famine in 2023 is growing after the UN's Food and Agriculture Organisation warned of an acute food crisis globally, said a stockbroker.

Investors are also concerned about the domestic economy as major indicators posted poor performance amid the raging war.

For example, export earnings slipped 6.25 per cent year-on-year to $3.9 billion in September, the first fall in 14 months, while remittances declined 11 per cent to $1.54 billion in September, the lowest in seven months.

The revenue collection growth decelerated to 12.63 per cent in the first quarter of the current fiscal year. In another ominous sign, inflation surged 9.5 per cent in August and 9.1 per cent in September.

"So, investors are selling shares. The number of buyers is low as they worry that the situation will worsen further," said the stockbroker.

Turnover on the Dhaka bourse fell 3 per cent to Tk 1,297 crore.

All the major sectors dropped. The travel sector shed 5.5 per cent, the service and real estate sectors fell 3.6 per cent, and the IT sector was down 2.9 per cent.

The engineering sector dominated the turnover chart, representing 18 per cent of the total transaction value on the day. The pharmaceutical sector accounted for 16 per cent of the turnover.

Among the few bright spots, Bangladesh Monospool Paper Manufacturing advanced 8.64 per cent. Fine Foods, Rahima Food Corporation, Eastern Cables, and Eastern Lubricants rose more than 5 per cent.

Apex Foods suffered the highest correction despite reporting more than doubling of net profit in the financial year that ended on June 30 on the back of a hike in product prices and a reduction of costs. It slid 13.69 per cent.

Far East Knitting, which posted more than 40 per cent higher profit in the last financial year, plummeted 13.04 per cent.

BDCOM Online, Navana CNG, and Apex Spinning declined more than 9 per cent.

The Caspi, the all-share price index of the CSE, gave up 164 points, or 0.86 per cent, to end at 18,895.

Of the issues that traded on the bourse in the port city, only 34 advanced, 104 declined, and 80 were unchanged.

Turnover, however, surged more than 300 per cent to Tk 69 crore.