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Corporate - February 28, 2023

Buyer crisis hits capital market

223 cos have no buyers

Mahfuja Mukul: There is an extreme buyer crisis in the country’s stock market. More than half of the companies are left without customers every day. This is causing continuous price declining. At the same time, the transaction drought is going on. Investors have been forced to take to the streets to protest after seeing such a pathetic state of the stock market. They also gave a memorandum to the Prime Minister.
There is a shortage of buyers in the stock market for several months. But recently that situation has become evident. In this, the share price of most of the companies has decreased along with the value index. And the transaction is at the bottom.
Like the last few working days, there was an extreme shortage of buyers in the stock market on February 26. At one stage of the day’s trading, the main stock market, Dhaka Stock Exchange (DSE), had no buyers for the shares and units of 223 companies. Even at the end of the transaction, the buyer’s room of these institutions remains empty. 119 are stuck at the floor price (minimum price) among the companies that have lost buyers. Orders to sell a large number of shares and units of these institutions come at the floor price.
Orders to sell a large number of shares and units of these institutions come at the floor price. On the other hand, zero is left after the purchase order.
And the shares and units of 104 of the companies that lifted the floor price became no buyers. Orders to sell large quantities of shares and units of these institutions came in at the lowest prices of the day and the buy order book became empty. This is not just a Sunday picture. Buyer crisis in the stock market has
now become a regular occurrence. Every day more than half of the listed companies have empty purchase order rooms. As a result, the investors who have the shares of these companies are trying to sell them but failing.
Analysts believe that such a buyer crisis and transaction drought has appeared in the stock market due to the investor’s confidence crisis. They said, the overall economy of the country is under a kind of pressure. Reserves are decreasing. Various international organizations are predicting lower gross domestic product (GDP) growth. All this has created a kind of mistrust among investors. That is why this slowdown is seen in the stock market.
They also say that investors have to be patient in such a situation of the stock market. There should be a mentality of holding shares without increasing the selling pressure unnecessarily. Markets may turn around if investors reduce selling pressure.
Meanwhile, common investors protested on the streets of Motijheel due to continuous price fall and transaction drought in the stock market. They gave a memorandum to Prime Minister Sheikh Hasina with 12 points of demand. On behalf of common investors, it has given a memorandum to the ‘Bangladesh Capital Market Investors Unity Parishad’.
Pointing out that the capital market is a victim of deep conspiracy, the memorandum demanded the Prime Minister to form a smart capital market free from irregularities and corruption. Along with this, it has been demanded to give an opportunity to invest in the stock market by paying 5 percent tax on undisclosed income.
Besides, a special fund of Tk 10,000 crore has been demanded to provide loans to investors at low interest rates. Apart from this, it has been demanded to completely withdraw tax on dividends, to reduce the tax rate difference between listed companies and non-listed companies to 15 percent.
In this regard, General Secretary of Bangladesh Capital Market Investors Oikya Parishad Abdur Razzak told, “In the current situation of the share market, our common investors are constantly losing capital. Little by little they are losing capital and becoming destitute. In protest, we held a sit-in program in front of the previous office of the Dhaka Stock Exchange. Along with this, I have given a memorandum from the Prime Minister to protect the common investors.
He said, “The stock market has been continuously falling for several months. Each time different issues are brought forward to bring down the rates. But we think that the current price drop in the stock market is not reasonable. Recently, remittance flows have been increasing. Also received loan assistance from IMF. So, we think the stock market is being driven down through conspiracy. In this situation only the Prime Minister can protect our common investors. That is why I have given a memorandum to the Prime Minister.
Meanwhile, the Bangladesh Securities and Exchange Commission (BSEC) set a floor price on the share and unit prices of each company on July 28 last year when the stock market continued to fall. After that, the floor price of 169 institutions which had less impact on the price index was lifted last December when the transaction drought occurred. However, the minimum price reduction is fixed at one percent.
In this, the share price of several companies that lifted the floor price after a few days of price decline is seen to increase. With that, the transaction speed increases. But now again the share prices of these companies are seen falling and orders are coming every day to sell huge shares at the lowest price of the day.
An investor named Mizanur Rashid said, “I have shares and units of eight companies. Five of them have been stuck at floor prices for months. Every day we try to sell them at the floor price, but they don’t sell because there are no buyers. And the share prices of the three companies that are outside the floor price are falling by about one percent per day. In this way, I am losing the invested capital little by little every day.
He said, ‘Thousands of investors like me have plunged into despair in the current situation of the stock market. Many are planning to leave the stock market. But the concerned parties are not seen to take any visible steps to improve the market. But when the share price increases, how many queries (questions) are given. Now the prices are falling continuously as if no one is watching. If this continues, there will be an investor crisis in the stock market.
Another investor named Zakir Hossain said, “Those who are involved in manipulation are making profit from the current stock market. The common investor is not able to make profit in this market, rather he is making loss. Even ordinary investors are not able to withdraw investment from the capital market. Ordinary investors are stuck in most of the institutions.
A member of the Dhaka Stock Exchange said, “Due to excessive selling pressure, there has been a buyer crisis in the stock market. In this case, just as ordinary investors have a role, so do large investors. A section of big investors is ordering huge sales of shares of certain companies every day so that ordinary investors cannot sell shares. Again, some small investors are placing orders to sell at the lowest price of the day to withdraw the investment.
Altogether, huge sales orders are coming in. This shows a buyer crisis.
He said, ‘The main reason for this condition of the stock market is that investors’ confidence in the market has decreased. The big challenge now is to bring back this trust. Now if the listed companies perform well and give good dividends to the investors, the confidence may increase. And if the confidence of the investors increases, the selling pressure will reduce and the momentum will return to the market.
AB Mirza Azizul Islam, former caretaker government advisor and former chairman of Bangladesh Securities and Exchange Commission, told about this image of the stock market, “There is disappointment among investors. Because the pace of macroeconomics is not satisfactory. Reserves are decreasing. The growth rate forecast by various international organizations is less than the government’s budget target. Due to which investors are suffering from depression.
He said, ‘I think investors should hold on to the shares. That is, sales pressure should be reduced. If the selling pressure eases, the index will rise. And selling in the falling market is not the right decision.
When asked whether any new steps are being taken by the regulatory body to speed up the stock market in the current situation, BSEC executive director and spokesperson Mohammad Rezaul Karim told, “We are motivating institutional investors to increase investment in the stock market to increase the speed of transactions.”

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