Turnover plummets to five-year-low | The Daily Star
12:00 AM, March 23, 2020 / LAST MODIFIED: 01:23 AM, March 23, 2020

Turnover plummets to five-year-low

Turnover on the stock market yesterday crashed to its lowest since December 11, 2014 amid a thin presence of buyers despite a regulatory move that aimed to forestall major slides seen a number of times in recent days.

An important indicator of the stock market, it dropped 66 per cent from last Wednesday to Tk 145 crore.

DSEX, the key index of the Dhaka Stock Exchange (DSE), yesterday fell 14.79 points, or 0.37 per cent, to end the day at 3,960, just a session after the regulator set the floor price of stocks at a level that is quite higher than the market demand.

The Bangladesh Securities and Exchange Commission (BSEC) ordered the bourses to set the floor prices of stocks on the basis of the average prices of preceding five days, with a view to preventing the securities from sinking further.

In order to implement the order, the bourses had to delay the beginning of trading for three and a half hours on Thursday.

When trading finally began, albeit for half an hour, the market was abuzz with sellers but buyers refused to purchase the shares at the prices that were much higher than the market driven-price.

"It was assumed that the market will be illiquid," said a stock broker, preferring not to be named.

Individual investors fear that the coronavirus may reduce the earnings of the listed companies, so they are not interested to buy stocks at the current prices. 

The companies' price-earnings ratio would rise in the coming days, meaning the stocks would be costlier than their return, he added.

Price-earnings ratio refers to the price of a stock compared to earnings.

The stock market has been witnessing its worst rout across the world, not just in Bangladesh, since the coronavirus became pandemic.

The Dow Jones Industrial Average, an index that measures the stock performance of 30 large companies listed on stock exchanges in the US, plummeted more than 31 per cent in the last one month.

The S&P 500, which measures the stock performance of 500 large companies listed on stock exchanges in the US, lost 30 per cent, European Euro Stoxx 50 37 per cent, German's DAX index 37 per cent, Spain's Ibex 35 38 per cent and Japan's Nikkei 225 index 28 per cent.

"This is normal that a stock market would fall on the news of such a virus pandemic because it has a deep impact on the global economy and also rge listed companies," said a merchant banker.

So, the government should not be worried about the recent market slide because it would rebound naturally after the effects of the pandemic peter out.

But, what the BSEC has done it will affect investors' confidence in the long-run, the merchant banker said, adding that many investors can't sell shares due to a lack of buyers.

Yesterday, Monno Ceramics was the most-traded stock: shares worth Tk 17 crore changed hands. It was followed by Square Pharmaceuticals (Tk 4.5 crore), JMI Syringes (Tk 3 crore), Bank Asia (Tk 2.8 crore) and Aziz Pipes (Tk 2.79 crore).

Bangladesh Industrial Finance and Corporation, a junk stock, rose the highest of 30 per cent, followed by Delta Spinners, Fareast Finance, Exim Bank First Mutual Fund and C&A Textiles.

BSRM was the worst loser: it shed 9.88 per cent. It was followed by Asia Pacific Insurance, Uttara Finance, Masons Spinning and KBB Power.

The port city bourse, however, rose 31.40 points, or 0.46 per cent, to end at 6,777.

Shares and mutual fund units worth Tk 5.55 crore were traded on the Chittagong Stock Exchange. Of the total of 205 issues, 44 rose and 161 were unchanged, while no stock fell. 

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