Insurance stocks lead weekly gains, offering investors top returns

Highlights

• DSEX rises 0.73% to 5,355
• DS30 gains 1.06% to 1,986
• Daily average turnover drops 8.55% to Tk554cr
• 148 issues advance, 205 decline, 31 unchanged

Investors saw the highest returns from general insurance stocks last week as funds flowed into the sector, driven by expectations that the interim government would ensure greater discipline in the industry.

According to the EBL Securities' weekly market report, investors got 10.3% return from the insurance sector, which was followed by life insurance, fuel and power, miscellaneous and food.

In early November, all members of the Insurance Development and Regulatory Authority (IDRA) resigned except its chairman following the interim government's suggestion.

Market insiders noted that the insurance sector lacked discipline under the previous government. However, with the current interim government in power, former senior secretary M Aslam Alam was appointed as chairman of the IDRA.

In early November, all other members of the IDRA resigned, leading to investor expectations that the government will appoint qualified individuals to restore order in the sector.

Additionally, there is growing speculation about the potential reintroduction of third-party motor insurance in general insurance. The government had previously suspended this practice, but it remains a significant revenue source for general insurance companies.

Investors believe that if third-party motor insurance is reinstated, it could boost the growth of the insurance industry.

According to the Dhaka Stock Exchange's (DSE) weekly report, the insurance sector's rally propelled all seven of its stocks into the top ten gainers list.

Leading the charge, Meghna Insurance saw a 21.60% increase in its share price, reaching Tk26.90. Paramount Insurance followed closely with a 22.10% rise to Tk44.20, while Desh General Insurance climbed 21.13% to Tk25.80.

Sonar Bangla Insurance gained 21.12% with its share price reaching Tk30.40, Asia Insurance rose 19.17% to Tk31.70, Global Insurance increased 18.98% to Tk25.70, and Provati Insurance went up 18.15%, reaching Tk33.20.

Meanwhile, DSEX, the broad index of the DSE, gained 39 points, or 0.7%, to settle at 5,355 points. The blue-chip index DS30 jumped by 20 points to reach 1,986 last week.

However, investors participation in the market declined by 8.5% to Tk554 crore as compared to the previous week.

EBL Securities said in its daily market review that the benchmark index of the capital bourse extended its gaining streak for three consecutive weeks last week, driven by investor interest in stocks with favourable earnings for the recently ended quarter.

The market remained volatile throughout the week as both buyers and sellers remained active on both sides of the trading fence to grab the realm of market momentum, it added.

However, the media reports regarding sovereign guarantee for a Tk3,000 crore loan to ICB, part of which will be used to provide liquidity support to the capital market, stimulated buyers' interest further and led the buyers to emerge as the dominant side by the end of the week, the report added.