FE Report
Dhaka stocks plunged nearly five per cent to two months low on Sunday, sparking demonstrations by hundreds of investors as turmoil at the securities regulator continued to weigh on the market.
The investors took to streets as the benchmark DGEN index suffered steepest one-day fall since April 11, even as the country's largest open-ended mutual fund came into operation Thursday last.
They barricaded key roads at Motijheel and staged rowdy protests in front of the Dhaka stock exchange building as the market declined 80 points just 10 minutes into trading.
The resignation of a member of the Securities and Exchange Commission exacerbated the situation mid-way through the session, as the regulator continued to operate like a lame-duck authority.
The DSE's four-hour trading session ended with more than 99 per cent of the stocks bleeding red, sending the DGEN 287.93 points, or 4.88 per cent, lower to 5,611.47 --- the lowest figure since March 6.
Of the 248 issues traded on the day, 244 declined, three remained unchanged and one gained. The broader All Shares Price Index (DSI) went down by 237.92 points or 4.85 per cent to 4,669.25.
The DSE-20 index comprising the bourse's twenty best performing companies lost 123.81 points or 3.26 per cent to 3,672.79.
Protesters swarmed the road in front of the DSE building, shouting slogans against the finance minister and the Bangladesh Bank governor and seeking intervention of the government.
They dispersed peacefully as riot police retook the control of the road. Some investors who have been gutted by the recent stock slump, however, threatened to stage a hunger strike from today (Monday).
Experts said lack of confidence in the market, a growing uncertainty over the appointment of new SEC chairman and members and poor corporate results by some financial institutions have had a negative effect on the market.
"Panic has gripped small investors. Lack of confidence has prompted many of them to sell off shares. Big and institutional investors are also avoiding the market due to the same reason," said fund manager Arif Khan.
"Banks are deliberately keeping a safe distance because of the ongoing liquidity crunch. All eyes are on the SEC, but I don't see any improvement of the situation until the government selects right persons for the commission," he added.
Other dealers have demanded immediate appointment of top regulators at the SEC and announcement of a government road-map to stabilise the market.
Khan said the entry of the Bangladesh Fund just a session earlier could not boost investors' confidence. "The BF has also suffered from lack of confidence. It's wrong to think that the fund alone can bring back stability," he said.
A total of 52.18 million shares changed hands on the day against 58.27 million in the previous session. Trade deals also decreased to 121,469 against 135,480 on Thursday.
Stocks worth US$1.50 billion was wiped off the market on the day in one of the worst mayhems in the market, as the DSE market capitalization slumped to Tk 2,608.75 billion from Tk 2,715.04 billion in the previous session.
Turnover declined to Tk 4.62 billion, down by 13.0 per cent, from Tk 5.3 billion Thursday.
All sectors lost with paper and printing sector suffering the biggest decline of 8.07 per cent.
Banks, the market bellwether, lost 4.79 per cent, NBFIs 5.76 per cent, telecommunications 4.80 per cent, fuel and power 3.41 per cent, general insurance 6.71 per cent and life insurance 5.38 per cent
Cement dived 4.69 per cent ceramics 7.46 per cent, textile lost 6.73 per cent mutual fund sector 3.66 per cent.
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