Bangladesh - Corporate - December 29, 2022


Market fetches lack of confidence

Mahfuja Mukul: The capital market of the country has passed a rubbish year 2022 due to the loosing trend and drainage of market capital.
Most of the investors have lost capital this year instead of making profit. Even after trying to sell shares at a loss for days, many did not find buyers. As a result, investors spent most of the year moaning. After the crash of 2010, the stock market has not had such a bad year.
Investors will definitely not want to see such a year again. However, this year of silent hemorrhaging of investors began with hope. The main stock market Dhaka Stock Exchange (DSE) rose 96 points on the first working day of the year. After such a big rise on the first day of the year, the stock market continues to rise throughout January. Along with price increase, transaction speed also increases.
Like January, the stock market was in a good position in the first half of February. On the one hand,
the price of shares and units increases, on the other hand, the speed of transactions increases. As a result, investors began to withdraw profits from the stock market through spontaneous investment. But when the Russia-Ukraine war started on February 24, the picture changed. The stock market fell under the grip of a terrible fall in prices.
The country’s stock market could not come out of the shock of that fall. After the start of the Russia-Ukraine war, the stock market suffered such a big shock that the regulatory body Bangladesh Securities and Exchange Commission (BSEC) fixed the minimum price (floor price) of each company’s shares and units. This blocks the path of further price reduction. But there was a drought of transactions. Transactions which had gone up to Tk 2000 crore decreased to less than Tk 300 crore.
Although the regulatory body protected the investors from huge losses by imposing the floor price, now the same floor price has become a thorn in the neck of the investors. Shares and unit prices of more than half of the companies are currently locked in the floor price. Investors are unable to sell these shares and units stuck at the floor price despite their best efforts. As a result, on the one hand, their investment is stuck, on the other hand, the path of new investment is closed.
How is the year 2022 for the stock market? If asked such a question. An investor named Abdur Razzak said, this year has not gone well for us. When I bought the shares, I made a loss. I have never seen such a bad year. Now even trying to sell shares at a loss, I am not getting buyers. Out of 10 company shares and one mutual fund I own, 10 are stuck at the floor price. I don’t know when I will be released from this.
Another investor named Ibrahim also expressed his disappointment. He said, I made some profit in the beginning of the year. But after the start of the Russia-Ukraine war, I saw no profit. Rather, the profit that was made before, that profit is gone; Also, the amount of original investment has also decreased. All in all, I am now at a big loss.
He said, the prices of all the companies whose shares I have bought have decreased. I am unable to sell the shares of these companies despite being in loss. Because the price of these shares is locked in the floor price. Places sell orders every day, but doesn’t sell. Month after month goes by like this. I can’t withdraw money from the stock market even if it is necessary. It is constantly bleeding us in silence.
Managing Director (MD) of IDLC Investment Moniruzzamanhas frankly admitted that the year 2022 did not go well for investors in the stock market. In a recent event, he said, investors have not seen profit from the stock market this year. Rather, the profit that was made last year has been lost this year. We don’t want to see such a tide play in the stock market.
Meanwhile, BSEC Chairman Professor Shibli Rubaiyat-ul-Islam said that the floor price has been given in the interest of common investors. He said, the number of institutional investors in the stock market is 80-90 percent. Just the opposite in our country. Where 80 percent are small investors, we have to take security measures. That is why we have taken a temporary measure with floor price. It is not a permanent arrangement.
On January 2, the first working day of the year, the main price index of the Dhaka Stock Exchange, DSEX, was at 6,853 points. From there it increased to 7000 points on January 11. Then on January 20, the index rose to 7,105 points. This is the highest position of DSE main index in 2022. Even in mid-February, the DSE’s main index was above 7,000 points. However, after the start of the Russia-Ukraine war, the value did not increase by 7 thousand points.
At present (after trading on December 15) the main index of DSE is standing at 6 thousand 256 points.
In addition to falling prices, the stock market has also fallen into a drought. At the beginning of 2022, the stock market regularly traded over taka a thousand crore, but now it has fallen below taka five hundred crore. In the last 20 working days (from November 20 to December 15), only three days have seen transactions of more than Tk 5,000 crore on DSE.
Market capitalization
Amid the recession, 250 treasury bonds were traded for the first time in the country’s stock market from October 10. The market capitalization of these treasury bonds is Tk 3 lakh 16 thousand 808 crore. That is, the market capitalization jumps as soon as the treasury bond trading starts in the stock market. On October 10, the market capitalization of DSE increased to Tk 7 lakh 72 thousand 514 crore. Although there is still half a month left for the end of the year, the market capital has already dropped to Tk 7 lakh 63 thousand 727 crore.
In other words, the market capitalization of DSE has decreased by Tk 8 thousand 787 crore in two months.
On the other hand, the market capitalization of DSE was Tk 5 lakh 21 thousand 676 crore on the day before treasury bond trading started in the stock market. And at the end of the trading of the first working day of the year, the market capitalization of DSE was Tk 5 lakh 47 thousand 90 crore. That is, the market capitalization of DSE decreased by Tk 25 thousand 414 crore before the start of treasury bond trading.
IPO drought
The fall market had an IPO drought throughout 2022. This year, six companies raised money from the stock market through IPO. Institutions have withdrawn Tk 626 crore 26 lakh 10 thousand from the stock market. In 2021, there were 14 companies that raised money through IPO. The institutions collectively withdraw money Tk 1,233 crore 26 lakh 9 thousand. That is, the number of companies coming to IPO has decreased by 8. Money withdrawal decreased by Tk 606 crore 99 lakh 99 thousand.
BO account decreased by 2 lakhs
At present the number of Beneficiary Owners (BO) accounts stands at 18 lakh 43 thousand 76. Among them, 13 lakh 88 thousand 469 of male investors and 4 lakh 54 thousand 607 of women. The BO accounts of local investors are 17 lakh 80 thousand 105 and those of foreign investors are 62 thousand 917.
On the other hand, at the beginning of the year, BO accounts were 20 lakh 34 thousand 539. Among them, 15 lakh 11 thousand 826 of male investors and 5 lakh 7 thousand 361 of women. The BO accounts of local investors were 19 lakh 32 thousand 826 and those of foreign investors were 86 thousand 361.
According to this, BO accounts have decreased by 1 lakh 91 thousand 463. Among them, the BO account of local investors decreased by 1 lakh 52 thousand 721. BO accounts of foreign investors decreased by 23 thousand 444. 1 lakh 23 thousand 357 of male investors among the reduced BO accounts. Besides, 52 thousand 754 BO accounts of women investors have decreased.

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