Investors pay no heed to warnings over insurance stocks

Stock investors have continued to chase after insurance stocks despite repeated cautions issued by analysts.

Insurance stocks propelled the capital market index and turnover to eventually soar yesterday.

Its impact was the highest on the benchmark index of Dhaka Stock Exchange (DSE), the DSEX, which rose 24 points, or 0.43 per cent, to stand at 5,535.48.

The sector's turnover accounted for 38 per cent of the overall DSE's. It was Tk 515 crore whereas the DSE's Tk 1,356 crore. Yesterday turnover, an important indicator of the stock market, rose 16 per cent.

Despite declaring almost the same dividend in 2020 as they had in 2019, insurance stocks are rising day by day which cannot be fundamentally acceptable, said a stock market analyst working as an asset management company's portfolio manager.

"We are not buying any insurance stocks as we are not seeing any reasons for the rise of the insurers' equity," he said.

The insurance stocks have already gone up to a very high level, so investors need to be cautious about their investments, he recommends.

If anyone invests in an overvalued stock, it leads to abnormality in the market, added the asset manager.

In the past few weeks, stocks of non-life insurers traded like hot cakes in the market and now it is the life insurance stocks, he said.

Rupali Life Insurance Company topped the gainers' list, rising 10 per cent followed by Sunlife Insurance Company, Sandhani Life Insurance, Prime Islami Life Insurance and Delta Life Insurance.

Stocks of Beximco traded the highest, worth Tk 158 crore, followed by LafargeHolcim Bangladesh, LankaBangla Finance, Beximco Pharmaceuticals and Asia Pacific General Insurance Company.

Dacca Dyeing shed the most, dropping 7.3 per cent, followed by Sonali Aansh Industries, Intech, Savar Refractories and Dominage Steel Building Systems.

At the DSE, 141 stocks advanced, 147 declined and 67 remained unchanged.

Chittagong Stock Exchange also rose. The CASPI, the general index of the port city bourse, advanced 37 points, or 0.23 per cent, to stand at 15,991.

Among 261 stocks to witness trade, 112 rose, 107 fell and 42 remained unchanged, shows the CSE data.