Dhaka stocks find no takers

Globally, stock market investors are looking to cash out their shares. It's the same here in Bangladesh -- except they are not finding any takers.

Yesterday, of the 343 companies, 236's stocks failed to find buyers. The same fate was seen for 242 companies on Tuesday.

Among them are many well-performing companies like Brac Bank, Square Pharmaceuticals, Grameenphone, British American Tobacco Bangladesh and Renata, according to data from the Dhaka Stock Exchange.

As a result, average turnover on the main board dropped to Tk 120 crore this week from more than Tk 350 crore previously.

Some of the investors need money but they are not able to sell shares, which will impact the market in the long run, said a stock broker requesting anonymity.

Most analysts blame the scarcity of buyers on the spot of financial engineering the Bangladesh Securities and Exchange Commission (BSEC) did last week. Last Thursday, the regulator fixed the floor price of all stocks by calculating the previous five days' average prices.

"Bangladesh spoils its stock market by interfering with limit-down prices," said Hasnain Malik, head of equity strategy at Tellimer, a London-based market research firm, in a LinkedIn post.

Market efficiency could be ruined by changing the floor price of stocks to the prior 5-day average (until further notice). It will inhibit efficient price discovery and accurate portfolio net asset value reporting for fund managers.

Citing it as a poor policy, he said this may kill off trading liquidity and efficient functioning of the market, particularly for foreign investors, whose portfolios may have to support daily liquidity and have a requirement to report accurate (realisable) net asset values and who, therefore, need fully functioning price discovery.

In the current week, most of the stocks were not even traded on the DSE due to dearth of buyers, he added.

Foreign investors dislike illiquid market and the BSEC's price setting have made the market illiquid ultimately, said a merchant banker.

"Such policy will impact the market later on while attracting foreign investors and smart investors. Because, they always keep away from illiquid market."

The BSEC could have left the market to its own devices and it would have corrected itself, he added.

A top official of an asset management company said any artificial price mechanism may not boost the stock market.

However, it impacts the investor's confidence in the long term, he said.

"So, no developed stock market's regulator pulled a stunt like the BSEC's even though bourses around the world are being battered by coronavirus. With the new policy the market has become buyer-less, so investors can't even sell their shares though they want the bare minimum price," he added.

Yesterday, DSEX, the benchmark index of the DSE, rose 31. 71 points, or 0.79 per cent to close at 4,008.28.

Turnover rose 150 per cent to Tk 348 crore. However, of the sum, Tk 237.7 crore was traded in the block market and Tk 110 crore in the main board.

ACI Formulations was the topped the gainers' list with its 9.9 per cent rise, followed by One Bank, National Life Insurance, Standard Bank and ICB Islamic Bank.

Premier Cement was the worst loser, shedding 6.4 per cent. It was followed by CAPM BDBL Mutual Fund, Bangladesh National Insurance Company, NCC Bank and Mutual Fund One.