Deserted stock market sustains deeper wounds
DSEX fell by 1.96%; turnover drops 62% to Tk208 crore
The already bleeding stock market sustained a deeper wound today (4 August).
Only six of the nearly 400 stocks and mutual funds in the Dhaka Stock Exchange (DSE) managed to avert the storm, while the key equity index DSEX fell by 1.96% 104 points to 5,229.
Stock prices and the indices entered a free fall as soon as the market opened at 10am as there was no impact-creating buyers against the panicked sellers.
The trading floors in brokerage firms were almost empty as investors chose to stay safe amid the ongoing violence related to the quota reform protests.
Moreover, as the peaceful student protests turned to one point demand for resignation of the government, the students' call for nationwide non-cooperation was confronted by ruling party activists today, which further unnerved investors.
Brokerage firms have also reduced their staffing to ensure safety.
"Curfew break was a relief, but no public transport made commuting tough today. I had to come to Motijheel despite a security threat," said a brokerage employee who lives in the capital's Bashundhara Residential area.
"Investors don't need to come in person as we all have the telephonic and online trading options. Still trading orders were extremely low," he told TBS.
Moments after the opening bell, most of the portfolio stocks fell to near the 3% bottom circuit breaker, and perplexed investors rarely opted to buy any beaten-down stocks, said brokerage professionals.
According to market data provider StockNow, more than 300 DSE scrips had no buyer bidding during the closing bell.
"It was a foreseeable nightmare," said Asaduzzaman, a retail investor who had been struggling to recover his big losses for the past six months and had been getting more frustrated every day since mid-July.
Stock market expert Abu Ahmed, a former professor of economics at the University of Dhaka, told TBS that the economy was struggling before the current unrest, and the high-interest environment had already dragged stocks down.
According to LankaBangla Securities Research, the weighted average interest rate for treasury bonds maturing within two years is 12.25%, while those with a five-year tenure yield 12.43%, as quoted at separate auctions in June.
"Now cheap stocks are becoming even cheaper, and investors don't know when the downturn might end," Abu Ahmed added.
Blue Chip index DS30 fell by 2.2% to 1,859, while Shariah Index DSES fell by 1.85% to 1,143.
Turnover in the DSE fell by 62% to less than Tk208 crore, thanks to the large investors who executed some of their investment plans before further deterioration of the law and order situation.
The number of trades dropped by 81%, while the number of traded shares or mutual fund units dropped by 75%.
Meanwhile, as the student protesters called for a march to Dhaka for tomorrow to force the government to step down, clashes erupted at many places across the country, causing the deaths of several dozen people.
Following this, the government took away the curfew break hours, declaring the continuation of curfew indefinitely from 6pm today alongside announcing general holidays for three days.
The general holidays were welcomed as a big relief for the people and professionals suffering from safety concerns.
Buy side research analysts were conservative in advising their clients as the corporate earnings were broadly in a declining trend for more than two years.
The expectation for macroeconomic stability in April-June seemed to have faded over the past few weeks as the ongoing unrest and violence in the country are hurting businesses.
Also, the frequent internet blackout is hurting the digital economy, according to entrepreneurs.
The only hope for investors was that many blue chip stocks were trading at very low prices, which could attract buyers, said analysts, adding that investors would be looking for a turnaround, both on the political and economic fronts.
However, no sector stayed afloat today, with all facing declines in market capitalisation.
Unilever Consumer Care, Heidelberg Materials, Square Pharmaceuticals, Express Insurance, British American Tobacco, Grameenphone, Techno Drugs and Beximco Pharmaceuticals were the turnover leaders in the DSE.
The Chittagong Stock Exchange also saw a similar free fall.