Majority of share market investors lose capital

-Facing confidence crisis
-Market lost Tk 76,000cr
-Index lost 500 points

Mahfuja Mukul: The country’s stock market has been in a bad state for a long time. Even after turning around for a few days, the stock market continues to fall again. Investors are constantly losing their invested capital. There is no way to stop the market from falling. Rather, as the days go by, the investors are losing their invested capital and becoming destitute. Analysts believe that the frequent change of decision of the regulatory body, the increase in the interest rate of the bank and the violence of the manipulation cycle – all in all, this is the state of the stock market.

They say that the interest rate of the bank has increased to 11 and a half percent. The Investment Corporation of Bangladesh (ICB), which is responsible for providing support to the market, is short of money. Banks, merchant banks, asset management companies are increasing selling pressure instead of buying shares. Again, investors’ confidence has been lost in some sector institutions. All in all, the stock market is continuously falling.
According to analysts, the regulatory body is suffering from indecision. Decisions are changing frequently. Various rumors are being spread on social media about the stock market. Various harsh words are being said about the officials of the regulatory body Bangladesh Securities and Exchange Commission (BSEC). All in all, there is now a crisis of confidence in the market.
Investors are expressing their anger on the top officials of the commission as the stock market fell in the end of the four-year term of the commission led by Professor Shibli Rubaiyat-ul-Islam. Some are saying harsh things on social media.
Shibli Rubaiyat-ul-Islam-led commission took the lead of BSEC in that difficult time when the stock market collapsed due to the corona epidemic. The four-year mandate of the commission will expire in May. After taking charge, the current commission has won the praise of investors with several positive decisions, including the start of trading in the closed stock market.
However, the current commission has come under great criticism for keeping the share price at one place with the floor price for a long time. BSEC removed the floor price from the stock market in the middle of January this year amid criticism from various parties. After lifting the floor price, the stock market turned around after a temporary price correction. The transaction increased to nearly two thousand crore rupees. The index rose to a 22-month high.
In such a situation, the indecisiveness of the regulatory body regarding the ‘Z’ group makes the stock market unstable again. The regulatory body BSEC issued a directive on February 15 on the basis of which listed companies will go to ‘Z’ group. The last point of the directive states that the directive will come into effect from the date of next dividend declaration or annual/interim dividend declaration of the issuer company.
Despite such instructions from the regulatory body, 22 companies were suddenly transferred from the Dhaka Stock Exchange (DSE) to the ‘Z’ group on February 18. Then comes the announcement that no more companies will be included in the ‘Z’ group. But later some other companies were taken to ‘Z’ group.
In this way, after some companies were taken to the ‘Z’ group, the share market fell in price. The stock market has been in a continuous decline for almost a month. DSE’s market capitalization has fallen by more than Tk 76 thousand crore due to the continuous fall in prices. And DSE’s main index fell by around 500 points.
Abu Ahmed, a retired professor of economics department of Dhaka University told about the continued decline in share market prices, “Correction is happening in share market due to various reasons. In the last 4 to 5 years, people are not interested in investing in shares of leasing companies. Investors are not interested in mutual funds. Even in the power sector, the government is not providing facilities as before. Government contracts with many institutions have expired. If these three sectors are excluded, how many companies remain?
Again, the interest rate (at the bank) has increased to 11 and a half percent. Now people will think that if I invest in the stock market, how much money will I get in dividends, and how much money will I get if I keep it in the bank. People think like this. Many big investors, merchant bankers, asset managers are investing their money in bonds and FDR’ – added this stock market analyst.
He also said, ‘ICB has no money. They are empty net sales. This is the main reason for the lack of liquidity in this sector. We have to see how much money is running behind the shares now, the supply of this money has decreased. Then what will happen if the stock market does not continue to fall in price!
Professor Abu Ahmed said, ‘Some shares have been taken by gamblers. Will they be there? No fresher is investing here. Banks are now selling what they invested earlier. ICB seller, ICB has no money. It is now a bankrupt company. So, who will buy shares?’
Talk to DSE Director Richard De Rosario. He told , “There is a crisis in the financial sector, there is a shortage of money in the banks, and FDR’s rate is increasing. They have a pressure. Besides, repeated decision changes are also creating additional pressure. There is indecision in the market on the issue of ‘Z’ group. Once the decision is made it will be effective after the next AGM (Annual General Meeting). Later it was seen again that 22 were brought to Z group. All in all, a complicated situation has been created.
Richard de Rosario said, ‘There is a crisis of confidence in the market in these matters. But the market is not always the same. Sometimes it happens like this, again it comes out of here. They will be in the market. Hopefully if people can buy good shares, if people have good shares, then they will wait, ultimately the rate will cross again.
Former President of Bangladesh Merchant Bankers Association (BMBA) Chayedur Rahman told, “Various types of propaganda are being done on social media, which has caused discomfort among investors. I found them visible.
What kind of propaganda is being run? To such a question, he said, ‘When you open Facebook, you will see how many kinds of propaganda are being carried out. Some are abusing the commission, others are advertising some items. None of these are desirable. These things spread panic in the market. If you talk nonsense on Facebook against your regulator, it can’t be good for the market.
As the current commission expires, does it have any impact on the market? Chayedur Rahman said to such a question, “Who came to the commission, who left – what is its relationship with our investment?” I will invest by looking at the company’s fundamentals. I will invest for dividends. Who became the chairman, who became the commissioner, who came and who left – what is the relationship with this. I will see if the company I will invest in is okay or not.
He said, ‘It is an ongoing process, there may be changes there (BSEC) at the end of a certain period. May not change again. We cannot say whether change will come or not.
“Currently many companies’ shares are undervalued. The bank’s shares lie at a PE (price-earnings ratio) of 4 to 5. You are not buying shares of closed companies. Who will take responsibility? Whoever is in the commission, is it the responsibility of the commission? You buy shares with your money, the decisions are yours, the profits and losses are yours. As long as investors are not aware, these problems will remain.
Chhaydur Rahman also said, ‘We support the prices of Khan Brothers, KPPL? Do we support Western Marine Shipyard prices? These closed institutions. But people are running towards these closed establishments, increasing the prices. Who will take this responsibility?
Rumors are spreading in the market, there is a kind of conflict between the big investors, when such information was presented, “How many kinds of gossip (rumors) are there in the market, without knowing any reliable information about these gossips, it is difficult to comment on it.” When an investor invests or not it is solely his own decision.
No index about 500 points
After a long time, the stock market regained some momentum after temporary price correction by lifting the floor price. The share price of most of the companies increases and the value increases almost every day. In this, the main price of DSE rose to 6 thousand 447 points on February 11. But the main index of DSE has now fallen to 5,968 points due to continuous decline in prices. That is, the main price index of DSE is decreasing by 479 points due to continued price decline.
Market capital decreased by Tk 76,000cr
On February 11, DSE’s market capitalization was Tk 7 lakh 75 thousand 985 crore. Now that market capitalization has reduced to Tk 6 lakh 99 thousand 635 crores. That is, the market capital has lost Tk 76,350 crore. Declining market capitalization means that the share and unit prices of listed companies have collectively fallen by that amount.
Transactions come down to one-third
From February 1 to February 15 of this year, more than a thousand crores of rupees were traded on DSE in 11 consecutive working days. Out of this, Tk 1 thousand 852 crore 51 lakh was traded on February 11. Tk 1,857.75 crore was traded on the previous working day on February 8. Now that transaction has come to Tk 500 crore. The last transaction on March 14 in DSE was Tk 514.63 crore. Its previous working day on February 13 was traded at Tk 483.30 crore.
Brokerage houses in panic
After a long time, the staff of the brokerage house are optimistic about the stock market as the transaction speed is increasing in the middle of January this year. Many were expecting to get a good bonus in the upcoming Eid. However, before the start of Ramadan month and at the beginning of Ramadan, there is a drought in the stock market with falling prices. This has again caused an unknown fear among them. Some people are worried about getting bonuses in the upcoming Eid.
Several officials involved in the transactions of the brokerage house said that if the stock market is good, the mind of the owner of the brokerage house is good, and the employees are also good. Many brokerage houses have cut manpower due to prolonged market downturn. The owners are trying to maintain the house by reducing the cost.
They said, after a long recession, the market is showing signs of improvement recently. I was hoping to get a good bonus this Eid. But now there is a recession in the stock market again. With the continuous fall in prices, the speed of transactions has decreased. If this situation continues, it will be difficult to raise the operating expenses. Then good bonus may not be available on Eid. There are even fears that employers may retrench workers if the fall in prices persists.