Stocks hit 27 months low
A steady fall in share prices brought the key index of Dhaka Stock Exchange below 4,000 points for the first time in the last 27 months, with stocks suffering more than 6 percent loss yesterday.
The DGEN, the General Index of the premier bourse, came down to 3,887 after a drop by 266 points at yesterday's close.
The DGEN, which stood at 3,383 points on November 15, 2009, crossed the 4,000-point mark the next day.
Analysts said the finance minister's remark on the national economy had dented investors' confidence further amid a liquidity crisis in the market for a tight monetary policy.
In a parliament session on Tuesday, Finance Minister AMA Muhith said the national economy was under a “dark shadow” because of uncertain trends on the global economic front.
Apart from this, a fruitless meeting of the Securities and Exchange Commission on Tuesday belied investors' hope that was reflected in yesterday's trading, said the analysts.
The meeting between the SEC and market stakeholders failed to bring any good news for investors, who hoped that some measures to stabilise the market would come from it.
Among the major sectors, non-bank financial institutions lost 8.03 percent, banks 6.24 percent and the power sector 5.11percent on the DSE. Pharmaceuticals and telecommunication sectors lost 4.59 percent and 2.83 percent.
“Investors lost their confidence and sold shares following the finance minister' comment on the economic crisis,” said Abu Ahmed, professor of economics at Dhaka University.
Political instability and tight monetary policy also dented their confidence, he said.
The central bank should adopt a liberal monetary policy to help increase liquidity flow in the market, Ahmed said.
Akter H Sannamat, a chartered accountant and market analyst, said the liquidity crisis in the market had damaged investors' confidence.
A minimum circuit breaker should be introduced soon to check the continuous fall in the market, said Sannamat.
He said a decline in cash reserve requirement and policy interest rates is necessary for the liquidity flow to rise in the market.
About 1.04 lakh trades were done with a turnover of Tk 269 crore. Of 257 issues, four advanced, 249 declined and four remained unchanged.
The Chittagong Stock Exchange also declined. The Selective Categories Index stood at 7,395.21 after losing 414 points.
Losers beat gainers 172 to six at the port city bourse. A total of 1.09 crore shares were traded with a turnover of Tk 38.58 crore.