Floor price drags down DSE turnover to a 13-year low
Turnover on the Dhaka Stock Exchange (DSE) plunged 72 per cent to Tk 42.97 crore yesterday, the lowest in 13 years, as investors refrained from trading because of the floor price set by the regulator.
The previous lowest turnover of Tk 40.39 crore was recorded on April 24 in 2007, data from the premier bourse showed.
The Chittagong Stock Exchange too saw a similar trading activity with shares worth only Tk 4.59 crore changing hands.
The fall in turnover, an important indicator of the market, came after the Bangladesh Securities and Exchange Commission (BSEC) set the floor price of all stocks on March 19 by taking into account the average price of previous five trading days to prevent the massive decline of the index amid the coronavirus pandemic.
The move made the capital market illiquid and after the floor price was introduced, the turnover averaged just Tk 180 crore, way lower than Tk 400 crore previously.
Due to the floor price, investors can't trade shares at the forced price, said a top broker. "So, turnover tanked."
Investors are keeping their hands off to see how the market behaves after the regulator withdraws the floor price, said a merchant banker.
The index may nosedive abruptly when the floor price is scrapped because it is not possible to keep the stock price up artificially, he said.
The pandemic-induced shutdown has battered the business of the listed companies as operations were closed for two months as part of a government effort to contain the virus and the demand has collapsed.
"So, their stock prices deserve a sharp fall and there is nothing the regulator can do," the merchant banker said.
Only some pharmaceuticals, telecommunications and technology-related companies would be able to make profits in the current year, while others would incur losses, said a top official of an asset management company.
"This is normal and investors should understand this reality. So, we are thinking of how the losses can be minimised."
Yesterday, 11 securities advanced, 36 declined and 265 were unchanged on the DSE.
DSEX, the benchmark index of the bourse, fell 10.01 points, or 0.25 per cent, to end the day at 3.953.38.
The port city bourse, however, rose 4.01 points to 6,808.23.
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