Stocks take a dive
Bangladesh's stock market took a dive yesterday thanks to a profit booking tendency among investors alongside an ongoing stand-off between Bangladesh Bank and the Bangladesh Securities and Exchange Commission (BSEC) regarding two issues.
The DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), fell 77 points, or 1.07 per cent, to 7,140.
The market dropped mainly for three reasons with two of them being the profit booking tendency among investors and the stand-off between Bangladesh Bank and the BSEC, according to a senior official of a stock brokerage firm preferring anonymity.
The third reason is the BSEC's recent order to Walton, ICB, and Berger Paints, asking them to offload more stocks so that their total free float shares stand at 10 per cent, he said.
Since the market has risen for the past two weeks or so, it was expected that some people would take profits.
The DSEX soared 5.66 per cent, or 389 points, in the last two weeks, DSE data shows.
Meanwhile, the stand-off situation is not a good sign for the market, the broker said.
In a meeting on Monday, Bangladesh Bank informed the BSEC that listed banks and non-bank financial institutions (NBFIs) cannot comply with the market regulator's directives on the capital market stabilisation fund and cash dividend payments as they are inconsistent with the Bank Company Act.
The commission recently allowed listed companies to declare cash dividends from the profits made in the just-concluded financial year despite having accumulated losses.
On condition of anonymity, a top official of a merchant bank said that BSEC's decision to have the three companies free float 10 per cent of their shares is a laudable decision even though the way it was issued is not.
Although the shares would be issued in several phases, it will still impact the value of these companies since people would want to offload their stocks.
"This ultimately impacted the market," he said, adding that the BSEC could allow the companies to repeat their initial public offering or sell shares in the block market.
The news regarding the conflicting stances of the market regulator and central bank over the use of unclaimed dividends of banks and NBFIs by the Capital Market Stabilization Fund and over payment of dividends from a specific year's profit despite cumulative losses affected the market, said International Leasing Securities in its daily market review.
"It casted a shadow of doubt regarding the sustainability of the market's recent bullish trend. So, investors remained watchful and preferred to book quick gains to recoup losses as they were afraid of the sustainability of the recent bullish momentum in the market," it added.
Turnover, an important indicator of the market, rose 2 per cent to Tk 2,097 crore while it was Tk 2,040 crore a day earlier.
Meghna Condensed Milk topped the gainers' list, rising 9.44 per cent, followed by Meghna Pet Industries, Meghna Life Insurance, Sonali Paper and & Board Mill, and Union Capital.
Tamijuddin Textile Mills shed the most, falling 9.7 per cent, followed by Alltex Industries, Paper Processing & Packaging, Jute Spinners, and Bangladesh Monospool Paper Manufacturing.
At the DSE, 52 stocks rose, 300 declined and 24 remained unchanged.
Stocks of LankaBangla Finance traded the most, worth Tk 111 crore, followed by Beximco Limited, Beximco Pharmaceuticals, Paramount Textiles, and Walton Hi-tech Industries.
The Chattogram Stock Exchange (CSE) also fell yesterday as the CASPI, the general index of the port city bourse, fell 171 points, or 0.81 per cent, to 20,857.
Among 317 traded stocks, 60 advanced, 227 fell and 30 remained unchanged.