Bourses see drop in turnover
Stocks fell yesterday as liquidity dried up for investors following the channelling of funds into several initial public offerings over the past month and capital getting stuck for a drop in insurance share prices.
The DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), fell 9.77 points, or 0.19 per cent, to 4,879.96 yesterday.
The bidding for determining cut-off prices of initial public offerings for Mir Akhtar Hossain Company, Lub-rref, and Index Agro was completed this month.
The subscription period for Dominage and Crystal Insurance also ended in November while that of Robi Axiata is underway.
Insurance shares had nearly doubled in the past few months, attracting investment. Later the prices fell, leading to a loss of interest among investors to sell those off, for which the capital got stuck.
Besides, prospective gamblers were successfully deterred from purchasing certain stocks due to prompt action of the market regulator, such as the formation of probe bodies to identify such persons, according to market analysts.
Though this cut off some investment and caused the turnover to fall, the Bangladesh Securities and Exchange Commission (BSEC) deserves appreciation for its efforts, they said.
Some rogue players in the insurance and mutual fund sectors were discouraged from engaging in gambling, and this move will have a positive impact on the market in the long run, said a top official of a merchant bank.
"Investors need to learn from this example and invest in good stocks rather than paying heed to rumours," he added.
Khairul Bashar Abu Taher Mohammed, CEO of MTB Capital, echoed the same, saying that insurance and mutual funds were being gambled with and such malpractice-intended investments in these sectors have been deterred.
"Without any reason, the sectors' stock prices had blown up," he said.
Meanwhile, the subscription periods for a few IPOs were scheduled over the past one month and so much of the investments made during that time were channelled into those IPOs.
"As a result, the turnover of the secondary market has dropped," Mohammed added.
The CEO also said he feels the second wave of Covid-19 was yet to make people limit their investments on the market.
Institutional investors are not participating in the secondary market yet, and as a result, the index and turnover remained low, said stock investor Abul Kalam Azad.
This is because institutional investors are either fearful of the Covid-19's impacts or are busy bidding for the recently approved IPOs.
"But without their participation, developing a sustainable, vibrant stock market is not possible," Azad added.
Institutional investors have been cautious about their spending since the outbreak began in March, according to a top asset manager.
"This is not about a potential second wave," he said.
The DSEX is still at a higher point than where it had been during the previous few weeks when there were no discussions about a second wave, he pointed out.
"But it is true that some general investors are reluctant to pour their money into stocks at the moment amid a possible second wave of infections," the asset manager added.
The number of coronavirus infections and deaths across the country rose in the past four consecutive days.
Yesterday, at least 2,364 new patients were registered while 30 people died in the past 24 hours.
In an effort to curb a fresh outbreak, the government recently announced several measures, including mobile court drives to ensure the use of masks in public spaces.
This awareness on healthcare apparently shone the spotlight on pharmaceuticals, for which Beximco Pharmaceuticals was the most traded stock yesterday, followed by Square Pharmaceuticals, Brac Bank, Beximco and Grameenphone.
Of the 355 companies traded, 93 advanced, 165 declined, and 69 remained unchanged.
Apex Foods topped the gainers' list with a 9.98 per cent increase followed by ACI Formulations, Bangas, Golden Son and Orion Pharmaceuticals.
Newline Clothing shed the most, losing 10.06 per cent followed by NCCBL Mutual Fund-1, SEML IBBL Shariah Fund, Titas Gas and ICB AMCL Second Mutual Fund.
Chattogram Stock Exchange also witnessed a falling trend in its index.
The CSEX, the benchmark index of the port city bourse, dropped 10.97 points, or 0.13 per cent, to 8,410.98 yesterday.
Of the 234 securities, 73 rose, 118 fell, and 43 remained the same.
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