Stock market loses Tk5,329cr amid disappointment

After a continuous rise following the election, Bangladesh’s stock market suffered a significant setback last week, with key price indices declining on four of five trading days.
The Dhaka Stock Exchange (DSE) lost Tk5,329 crore in market capitalisation during the week as share prices fell for a large majority of listed companies. 
Of the companies traded, share and unit prices rose for only 60, while 310 declined and 16 remained unchanged.
Market insiders said the sharp rise following the election was not supported by strong fundamentals. 
Rather, the rally was driven largely by investor expectations surrounding the new government and the new regulatory body. 
As those expectations have yet to translate into visible results, investor sentiment has started to weaken.
Former Bangladesh Securities and Exchange Commission (BSEC) chairman Faruq Ahmed Siddiqi said the market’s 700-800-point rise following the election had no significant fundamental basis.
“Investors expected the new government to do something good and the new regulatory body, formed with experienced individuals, to take the capital market to a better position,” he said.
“But a market cannot sustain itself for a long time on expectations alone. If expectations are not reflected in actual work, disappointment naturally develops in the market,” he said.
Siddiqi said there had been virtually no new initial public offering (IPO) in the market for the past two and a half years, while both foreign and domestic investment remained weak.

At the same time, existing industries and factories were struggling with an energy crisis, leaving many companies unable to operate at full production capacity, he said.
Businesses were facing pressure from both production disruptions caused by energy shortages and high borrowing costs, Siddiqi said. Bank loan interest rates have reached 14%-15%, significantly increasing the cost of funds for businesses.
“These two pressures are reducing the profits of most industrial enterprises. At the same time, their ability to pay dividends is also declining,” he said. “In such a situation, it would not be reasonable to expect the capital market to rise continuously.”
The DSE’s market capitalisation stood at Tk6.94 lakh crore at the end of the last trading day of the week, down from Tk6.98 lakh crore a week earlier.
The DSE’s benchmark index, DSEX, fell 146.92 points, or 2.59%, during the week. The DSES index, comprising Shariah-compliant companies, declined 32.95 points, or 2.90%, while the DSE-30 index, comprising selected companies, fell 45.42 points, or 2.12%.
Trading activity also weakened. Average daily turnover on the DSE fell to Tk554.24 crore from Tk608.81 crore in the previous week, a decline of Tk54.57 crore, or 8.96%.
Sharp Industries recorded the highest turnover during the week, with average daily trading worth Tk23.70 crore, accounting for 4.28% of total DSE turnover. Envoy Textiles ranked second with Tk23.18 crore, followed by Malek Spinning with Tk16.62 crore.

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