Stock market lost over Tk 100,000cr capital

Staff Correspondent: The country’s stock market is in a continuous decline. Investors are losing their invested capital every day due to falling prices. This price decline has been going on for more than two months. In the meantime, the stock market has lost more than Tk one lakh crore by reducing the price of shares and units of listed companies. This decline started after January 17 of this year and continued throughout the last week. Out of the four trading days in the stock market last week, prices fell on three trading days. In one week, the market capitalization of Dhaka Stock Exchange (DSE), the main stock market, has become more than Tk 13 thousand crore.
Bangladesh Securities and Exchange Commission (BSEC) lifted the floor price on January 18 after holding
the share price at one place for a long time. Then there was a big shock in the stock market. Just as the stock market was recovering from this shock, the controversial decision on the ‘Z’ group was taken, which accelerated the fall of the stock market. After that, the stock market could not turn around. On February 15, the regulatory body BSEC issued a directive on the basis of which the listed companies will go to the 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. It was later announced that no more companies would be included in the Z group, but later some more companies were included in the Z group. In this way, after some companies were taken to the ‘Z’ group, the share market fell in price. On January 17, the market capitalization of DSE was Tk 7,88,449 crores. The market capitalization is now Tk 6 lakh 79 thousand 229 crore. That is, the market capitalization of DSE has lost Tk 1 lakh 9 thousand 220 crores. A fall in market capitalization means that the share and unit prices of listed companies have collectively fallen by that amount. In other words, that amount of money is gone.
In addition to the loss of large sums of money in the stock market, prices and transactions also suffered a big shock. On January 17, DSE’s main index was 6,346 points. Now that index has decreased to 5,778 points. That is, the main price index of DSE has decreased by 568 points.
The country’s stock market has never been in such a bad state even during the commission led by BSEC chairman Shibli Rubaiyat-ul Islam. The commission headed by former chairman Khairul Hossain stopped trading after the stock market crashed in early 2020 due to the covid scare. In such a situation, Shibli Rubaiyat-ul Islam took over as BSEC chairman in May 2020. He was joined by the Commissioner of Accounts and three others.
The new commission under the responsibility of BSEC resumed trading in the stock market which had been closed for 66 consecutive days on May 31 of that year. Shibli Commission issued a strict message against the irregulars besides opening the closed transactions. Several individuals and institutions were fined heavily for their involvement in irregularities. The government investment institution Investment Corporation of Bangladesh (ICB) has been warned. Various brokerage houses are warned along with fines. Later, initiatives were taken to reorganize the ICB. IPOs of a dozen weak companies were cancelled. The Shibli Rubaiyat-ul Islam-led commission has been praised by various parties for taking such steps, which has a positive impact on the stock market as well. The stock market turned around in the middle of the corona epidemic. Transactions that went down to Tk 50 crore turned into Tk thousands of crore. After that, the stock market has been up and down for several times, but now the stock market is standing on the edge of the abyss. Shibli Rubaiyat-ul Islam, who was appointed for a four-year term, and the term of the three commissions will end in the first phase next May. Shibli Rubaiyat-ul Islam’s first term before the completion of the share market is in such a bad situation.
The market stakeholders are also surprised by the continued price decline in the stock market. DSE Brokers Association of Bangladesh (DBA) president Saiful Islam said, “We are also trying to understand this, it is not supposed to happen like this.” Because now there is no news in the market, still it is happening. He said interest rate is a major issue. There is nothing more than that. We think interest rates are key. The interest rate is 11 percent, the highest interest rate since 2016-17. When asked whether the money is going out of the stock market and going to the bank, he said, it is going to the bank, it is going to the treasury bond. However, the price drop in the stock market is by no means normal. It is normal for stock market prices to fall due to rising interest rates. But the rate of decline is not in line with our expectations.
Several commissioners including the chairman of BSEC are about to expire. There is buzz in the market whether their appointment will be renewed or not. When asked whether it has any effect on the market, he said, there is still a lot of time. It doesn’t seem to have any impact on the market.
BSEC Executive Director and Spokesperson Mohammad Rezaul Karim said that the stock market is now in a bearish trend. We believe that this bearish condition is prevailing due to panic sell and force sell. The commission is taking various steps to get out of this situation. When asked what kind of steps are being taken, he said that the decision taken to give a loan of Tk 100 crores to capital market intermediaries from the Capital Market Stabilization Fund (CMSF) has not been given yet. The Commission is trying to provide this money quickly. Besides, a plan has been taken to work jointly with all parties for market development. He further said that whether someone is trying to destabilize the market for special purpose or not, it will be seen at a loss. Action will be taken against anyone who tries to do so.
Last week’s market chart
Last week, out of four trading days in the stock market, prices fell on three working days. In this, shares and units of only 35 companies participating in trading on DSE during the week have entered the list of increasing prices. On the contrary, the price has decreased to 343. And the price of 15 was unchanged. The market capitalization of DSE stood at Tk 6 lakh 79 thousand 229 crore at the end of the last working day of the week, which was Tk 6 lakh 92 thousand 540 crore on the last working day of last week. That is, the market capitalization of DSE has decreased by 13 thousand 311 crores within a week.
Meanwhile, DSE’s main price index DSEX fell by 163.34 points or 2.75 percent. The DSE-30 index, which comprises the best companies selected between the other two indexes, fell by 46.63 points or 2.27 percent. And the DSE Shariah index, which comprises companies operating on the basis of Islamic Shariah, fell by 38.49 points or 2.98 percent.
Along with the big fall in the price index, the transaction speed also slowed down. An average of Tk 493.93 crore was traded on DSE every working day of the week. In the previous week, the average daily transaction was Tk 496.28 crore. That is, the average transaction per working day has decreased by Tk 2.35 crore or decimal 47 percent. Shares of Asiatic Laboratories were the most traded in taka terms on DSE during the week. The daily average of the company’s shares was traded at Tk 283.2 million, which is 5.73 percent of the total transaction. Shares of Central Pharmaceuticals in the second place were traded at an average of Tk 24.37 crore on a daily basis. Alif Industries is in the third position with a turnover of Tk 19.95 million. Besides, the list of top 10 trading companies includes Best Holdings, Golden Son, Fu-Wang Ceramics, Shinepukur Ceramics, Malek Spinning, Fortune Shoes and Emerald Oil.