Insurance stocks surge as investors shift focus

Most insurance stocks surged yesterday amid a fall at Dhaka Stock Exchange as investors are increasingly shifting their focus to the insurance sector away from banks.

Banking stocks mostly dominated the trading in the last 15 days and regularly became top gainers whereas insurance stocks had moved slowly.

Now, investors expect that other sectors, including insurance, would move in the coming days, said market insiders.

Of the 47 listed insurance companies, 33 advanced, 10 declined and four remained unchanged on the premier bourse. Non-life insurance stocks rose 6.9 percent and life insurance stocks went up 4.4 percent on an average, according to IDLC Securities data.

On the other hand, the price earning (PE) ratio of the insurance sector is lower than the market PE ratio. So, these stocks have the potential to move further, analysts said.

According to DSE data, the price-earnings ratio of the insurance sector was 11.74 on the last day of 2018 when the total market PE ratio was 15.09. On Tuesday, the sector's PE ratio was 14.59 against the market PE ratio of 16.29.

The PE is the ratio for valuing a company that measures its current share price relative to its per-share earnings. A low PE can indicate either that a company may currently be undervalued or that the company is doing exceptionally well relative to its past trends.

Yesterday, the top five gainers on the DSE were from the insurance sector. Eastern Insurance surged 9.91 percent, Karnaphuli Insurance was up 9.85 percent, Takaful Islami advanced 9.83 percent, Agrani Insurance added 9.78 percent, and Rupali Insurance gained 9.75 percent.

However, the benchmark index, DSEX, dropped 23.79 points, or 0.40 percent, to end the day at 5,839.48. Turnover fell 12.2 percent to Tk 1,000.52 crore.

Khulna Power dominated the turnover chart with 40.75 lakh shares worth Tk 28.31 crore changing hands, followed by Olympic Industries, Dhaka Bank, JMI Syringes and United Power.

Top three negative index contributors were Olympic Industries, BATBC and Grameenphone, according to IDLC Securities data.

Of the traded issues, 123 securities advanced, 185 declined and 37 closed unchanged on the premier bourse.

Chittagong stocks also declined with the bourse's key index, CSCX, shedding 34.16 points, or 0.31 percent, to finish at 10,813.308.

Losers beat gainers as 153 issues declined, 90 advanced and 28 finished unchanged on Chittagong Stock Exchange. The port city bourse traded 1.19 crore shares and mutual fund units worth Tk 36.13 crore.