Stocks can’t stop falling as coronavirus fears reign supreme
When it rains it pours, it is often said, and the condition of the Dhaka Stock Exchange is exactly that.
The bourse has been on the slide for the best part of the past six months now. Just when it was propping up -- be it organically or through intervention -- came the blow of coronavirus pandemic that is bringing the world down to its knees.
Yesterday, shares on the Dhaka Stock Exchange tumbled for the third straight day, plummeting nearly 5 per cent as investors rushed to cut losses fearing the market may sink further as the coronavirus reigned supreme.
The government yesterday announced that three more persons were diagnosed with the COVID-19 in Bangladesh, taking the number of active cases to five.
All educational institutions would be closed from today through March 31 as the government moved to contain the spread of the deadly virus.
DSEX, the key index of the country's premier bourse, lost 196.75 points, 4.96 per cent, to close at 3,772.55 yesterday, the lowest since October 21, 2013.
Since March 8, when the government said three people tested positive for coronavirus in the country's maiden cases, the index shed 612 points, or 13.95 per cent.
During the time, about Tk 37,853 crore, or 11.24 per cent, eroded from the DSE as market capitalisation.
Yesterday's fall brought down the market capitalisation to Tk 298,893 crore, the lowest since May 2, 2016.
Even before the coronavirus outbreak, which was first reported by China in December last year, the index had been sluggish for a few months.
Between September 9 and January 14, the DSEX shed about 1,000 points due to huge selloffs by foreign investors, liquidity pressure, lack of confidence, the long tussle between Grameenphone and the telecom regulator over audit claims and a fear of contraction of the economy.
To halt the free fall, the Bangladesh Bank has announced liquidity support for banks for six months. The central bank also provided a revolving fund to the Investment Corporation of Bangladesh to invest in the stock market.
It redefined banks' exposure definition to increase their investment capacity.
As no steps were working to arrest the bear run of the market, the central bank announced a package for banks on February 10, allowing them to set up funds worth Tk 200 crore each on the back of the financial support.
Thanks to the latest initiative, the index had started to pick up, but its upward movement was nipped in the bud by the coronavirus, which has spread to more than 148 countries, infected 169,387 people and killed 6,513 as of yesterday, according to the US's Johns Hopkins University.
"Stock investors had already panicked before the coronavirus outbreak but since the virus emerged it has been deepening," said a merchant banker.
The central bank announced the special packages for banks to boost liquidity support and alleviate investors' nervousness. However, most banks did not avail the package, he said, adding that the fear centring the coronavirus, which grew from a Chinese outbreak to a global pandemic, eroded investors' confidence.
Institutional investors are also tense and they think that the impact of the coronavirus would hit the earnings of the listed companies.
Still, they are buying whereas individual investors are selling mostly, a stock broker said.
If the listed companies face difficulties in sourcing raw materials and export products due to already disrupted global supply chain, their earnings will be impacted, he added.
Turnover, another important indicator of the DSE, however, rose 8.81 per cent to Tk 406.63 crore yesterday.
Of the traded issues, 10 advanced, 333 declined and 12 closed unchanged. FAS Finance topped the gainers' list with 7.89 per cent increase, followed by Golden Son, Popular Life Insurance, International Leasing and Beximco Synthetics.
IPDC, a non-bank financial institution, shed mostly, dropping 14 per cent, followed by Dutch-Bangla Bank, Progressive Life Insurance, Shurwid Industries and IDLC.
Square Pharmaceuticals was the most traded stock with a turnover of Tk 24.66 crore, followed by Monno Ceramics, Orion Pharma, Brac Bank and BATBC.
Chattogram stocks also fell: CSCX, the broader index of the port city bourse, slipped 350.84 points, or 4.76 per cent, to close at 7,017.02.
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