Stocks surge on cenbank nod to ICB’s Tk3,000cr loan
During the session, 329 issues advanced, while 37 declined and 29 remained unchanged
The capital market saw a slight recovery today (27 November), bolstered by improved sentiment following the central bank's approval of a Tk3,000 crore sovereign-guaranteed loan for the Investment Corporation of Bangladesh (ICB).
The DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), surged by 54 points, or 1.06%, to close at 5,197. Similarly, the blue-chip index, DS30, gained 23 points to reach 1,917.
Market turnover also increased by 26%, rising to Tk451 crore from Tk359 crore in the previous session.
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During the session, 329 issues advanced, 37 declined, and 29 remained unchanged.
EBL Securities noted in its daily market review that the indices remained upbeat for most of Wednesday's session, with the market recovery driven by price appreciation across the majority of stocks.
Market insiders revealed that the ICB, a state-owned entity responsible for stock investments, secured approval from the Bangladesh Bank for a state guarantee on a Tk3,000 crore loan to bolster its financial base and support capital market investments.
Abu Ahmed, chairman of ICB, told The Business Standard, "We have been informed by our officers that the central bank has approved our proposal for the state-guaranteed loan of Tk3,000 crore."
However, a challenge has emerged regarding the interest rate, as the Bangladesh Bank has set it at the repo rate, currently 10%, which serves as the policy rate. "We had requested the loan at a lower rate of around 4%," Ahmed added.
The ICB chairman explained, "The ICB holds a substantial amount in term deposits, which currently have an interest rate of 12%. Each year, we have to pay around Tk900 crore in interest.
"A portion of the term deposits will be repaid, and the remainder will be invested in the capital market. By repaying some of these term deposits, we can reduce our interest payment burden, thereby strengthening the ICB's financial position."
He noted, however, that implementing the plan with this high-interest loan would be very difficult and, in fact, may render it ineffective.
"We plan to meet with the finance adviser to discuss and finalise the interest rate," he added.
