DSE key index slides to three-year low, below 5,800

The benchmark index of the country's premier bourse Dhaka Stock Exchange (DSE) plummeted below the 5,800 mark on Wednesday for the first time in more than three years.

Furthermore, on Wednesday (27 March) decline extended the losing streak for three consecutive days, during which the DSEX lost 179 points.

The prime index closed down 71 points at 5,762 – the lowest since May 12, 2021.

The port city bourse, the Chittagong Stock Exchange, also settled in the red terrain. The selected indices, CSCX and All Share Price Index (CASPI), declined by 72 points and 124 points to settle at 9,956 and 16,579, respectively.

Meanwhile, since the removal of the floor price restriction on 18 January, the major index of the DSE has lost a total of 572 points, and the market capitalisation has eroded by Tk1,08,707 crore, bringing it to Tk6.79 lakh crore.

Due to the massive downfall, investors have emptied their holdings in 51,224 beneficiary owner (BO) accounts in the last two months.

The DSE Brokers' Association (DBA), in a meeting on the downward trend of the stock market, opined that there is no reason for the deteriorating market situation.

But there is a price adjustment of stocks after lifting the floor price barrier, which is normal, they said in the meeting held virtually last week.

The broker representatives indicated that the market will return to normal very soon as the country's economy is turning around.

The representatives have raised several points, including addressing rumours circulating in the market suggesting a potential re-implementation of floor prices on share prices, which they deem false and baseless. The DBA does not anticipate a reintroduction of floor prices.

Besides, a discussion surrounding the potential re-appointment of the current chairman and commissioners of BSEC as their terms conclude has contributed to the recent decline in the stock market. Uncertainty about whether the current commission will continue for another term or if new appointees will take over has cast a shadow of uncertainty over the market's future trajectory, according to market insiders.

Meanwhile, the BSEC warned against spreading false information and rumours about the capital market on online platforms, including social media, on 17 March.

In such a situation, the stock market watchdog said it will take legal action against those involved in spreading various rumours including market conditions or share price predictions.

The regulatory body perceives that market discipline is being disrupted by rumour mongers.

The managing director of a brokerage firm said, currently, the interest rate is over 11% on Treasury bills. In line with this, banks and non-bank financial institutions are also increasing interest rates. In such a situation, money goes out of the stock market and goes to deposits in all countries in the world.

"Investors are now turning to deposits to stay risk-free. Moreover, there is no supply of good shares to attract investors, nor is there any effort," he said. 

He also said that for the last year, most of the companies paid low dividends. Besides, economic uncertainty increases the risk for investors