Stocks bleeding deepens, losing streak extends to fifth session
The Dhaka bourse extended its losing streak for the fifth consecutive session yesterday, as widespread sell-offs by jittery investors continued to weigh heavily on the market.
DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), lost 114 points in the five trading sessions between 5 and 11 December.
Today, the market capitalisation plunged by Tk13,468 crore, dropping to Tk6.53 lakh crore.
Saiful Islam, president of DSE brokers association (DBA), told The Business Standard, "Due to the continued slump in the stock market, both investors and intermediaries are very frustrated.
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"We are not receiving any hope regarding the market. There is no clear solution to escape this situation either," said Saiful, who is also a director of BRAC EPL Stock Brokerage.
He said, "In this scenario, government intervention is needed for market improvement. However, the government is not responding adequately.
"Since the interim government took charge, we have been demanding discussions with market intermediaries, but no response has been forthcoming."
Today, the DSEX lost 42 points and settled at 5,124 points. Turnover decreased by 20.6% to Tk304 crore as cautious investors shied away from taking positions in equities considering the current volatile state of the market.
On the sectoral front, pharmaceutical stocks accounted for the highest share of total turnover at 20.6%, followed by textiles at 18.0% and banks at 10.9%. Among the traded stocks, 50 advanced, 291 declined, and 58 remained unchanged.
EBL securities, in its daily market commentary, said the benchmark index of the DSE extended its losing streak as investor sentiment further triggered amid concerns over market momentum, made worse by repeated regulatory actions against stock manipulators in an already volatile environment.
"Despite a short-lived upbeat momentum at the opening thirty minutes of the session, the market pulse shifted to a steep downturn, with widespread sell-offs from jittery investors that pushed the majority of scrips sliding into red territory, spurring worries regarding the market's outlook," the commentary added.
The confidence crisis
When asked if there is a liquidity crisis in the market, DBA President Saiful said, "The bigger crisis in the stock market right now is a lack of confidence, rather than a liquidity crisis. Currently, no one is willing to participate in the market due to lack of confidence."
He said, "The government is providing a loan of Tk3,000 crore to the investment corporation of Bangladesh (ICB) to support the market, but this is not a solution. Providing funds to the ICB benefits certain officials within the organisation, but it does not contribute to the development of the stock market."
When asked what should be done to overcome this situation, he said, "The government should sit with stakeholders and hold discussions. They need to implement long-term measures for market development. Only then, confidence in the market will be restored."
He further stated, "It doesn't seem like anyone is concerned about the market being in this situation.
"If there's instability in the prices of basic commodities like potatoes, discussions are held with traders. However, though the stock market has been experiencing a downturn for some time now, no one from the government is addressing it."
"If they [government] had engaged with stakeholders, perhaps a solution could have come by now, but they are not doing so," he added.
