Panicked investors send stocks to a three-year low

Stocks hit a three-year low yesterday as the cloud of pessimism in the market refuses to go away.

Yesterday, DSEX, the benchmark index of the Dhaka Stock Exchange, shed 52.74 points, or 1.10 percent, to close at 4,708.68 -- the lowest since November 17, 2016.

Both general and institutional investors are panicking, so almost all of them went for sell-offs, said market insiders.

Moreover, some of the stock brokers and merchant banks executed forced sale as many well-performing stocks plunged below their critical level.

“Stocks are falling, although there is nothing wrong with any of the economic indicators,” said a stock broker requesting anonymity.

Furthermore, the government has given many incentives to boost the ailing stocks, but nothing can revive the slide.

The main reason stocks are falling is confidence crisis, said Abu Ahmed, a stock market analyst.

“And the crisis is mounting due to the failure of the Bangladesh Securities and Exchange Commission to curb manipulation in the market.”

All the investors are thinking the index may fall further so they do not want to buy, he said, adding institutional investors should provide market support to boost the general investors’ confidence.

Institutional investors also have a serious confidence crisis, as junk stocks are soaring more than the fundamentally sound ones, said Ahmed, also a former chairman of the economics department of Dhaka University.

Many low-performing stocks got listed on the bourses in the last one decade and they raised more than Tk 5,000 crore from the market in return for scanty dividends.

“So the market is now suffering,” he added.

A merchant banker said all the general and institutional investors were suffering from liquidity crunch, so Bangladesh Bank came forward to solve the crunch and expanded the room for institutional investors to invest more.

Earlier in May, the BB allowed banks to remove investment of non-listed securities from their market exposure to create room for investment.

In the same month, the central bank provided a revolving fund of Tk 856 crore in order to boost the market.

The central bank also announced a liquidity support for banks last month in the form of Repurchase Agreement (repo) to invest in stocks.

Despite all the steps, DSEX, the benchmark index of the Dhaka Stock Exchange, fell 693.32 points, or 12.83 percent since June.

Since June 1, the market lost Tk 40,572 crore, which is 10.22 percent of its value.

Turnover, another important indicators of the market, dropped 17.7 percent to Tk 288.36 crore yesterday.

Of the traded issues, 30 advanced, 292 declined and 30 remained the same.

National Tubes dominated the turnover chart with transaction of Tk 14.35 crore worth of shares, followed by United Power Generation, Monno Jute Stafflers, Silco Pharmaceuticals and Eastern Insurance.

Emerald Oil, one of the junk stocks, was the day’s best performer with a 9.92 percent gain, while Anlima Yarn Dyeing was the worst loser, shedding 9.80 percent.

Chattogram stocks also declined with the bourse’s benchmark index, CSCX, decreasing 97.05 points, or 1.10 percent, to finish the day at 8,708.31.

Losers beat gainers as 193 declined, 26 advanced while 21 finished unchanged on the Chittagong Stock Exchange.

The port city bourse traded shares and mutual fund worth Tk 10.66 crore.