Stocks continue to fall on minister’s remarks

Dhaka stocks, passing through worst ever spell of losses, plunged further on Monday following the latest comments of finance minister Mustafa Kamal that the government had no control over the capital market.
The key index of Dhaka Stock Exchange hit a 28-month low as repeated ‘confusing remarks’ by the minister along with investors’ lack of trust in regulators fuelled further panic, said market operators.
DSEX, the key index of Dhaka stocks plunged 1.19 per cent, or 62.73 points, to close at 5,175.46 points, the lowest after January 08, 2017 when it was at 5,158.69 points.
Bangladesh capital market has been falling for 14 weeks eroding Tk 37,000 crore in market capitalisation and the investors are at their wits’ end finding no way to exit.
‘Liquidity shortage and rampant sale of placement shares initially fuelled the fall of the index, but later finance minister’s comments along with lack of initiative to reign in slide worsened the situation,’ said a stockbroker.
‘How long will it fall I want to see,’ Mustafa Kamal told investors and entrepreneurs’ conference on March 28, causing all concerned to raise their eyebrows, he said.
On April 22, the minister commented that he found no problem at the capital market despite the record 12-week slump in stock prices at Dhaka stocks. The comment reportedly triggered share sales in the market.
On April 25, the minister said that there were two groups — lion and goat — at the stock market with the lion prevailing over the goat. The comment hit investors’ sentiment.
Stakeholders said that the minister’s Sunday’s comment that the government had no control over the stock market eventually put no more hope for the investors.
A section of investors under the banner of Biniogkari Oikya Parishad (Investors’ Unity Council) on Monday held a token hunger strike seeking steps for stabilising the capital market. They called off the hunger strike with a request of the Workers Party of Bangladesh president Rashed Khan Menon.
Menon, also a ruling alliance lawmaker, said that if the small investors were goat, it was the government who would save them.
He asked how the Bangladesh Securities and Exchange Commission chairman continued to hold the office for the third term in violation of the law.
Market experts said that investors’ confidence was shattered by a number of issues including lack of regulatory measures against fraudsters and manipulators, listing fundamentally weak companies with significant number of placement shares, sale of directors’ shares in the public market and unregulated corporate declarations of huge bonus dividends.
Former commission chairman Faruque Ahmed Siddique said, ‘The market is going through a deep bearish trend as investors have lost their confidence due to manipulation in the market and new companies have failed to perform well in recent years.’
Investors lost trust in the commission which should be addressed soon, he said.
Former interim government adviser and commission chairman AB Mirza Azizul Islam said that the country’s capital market was a falling market as investors was yet regain confidence.
The regulator should find out the root reasons behind investors’ lack of confidence and address those issues, he said.
Good companies should be brought with negotiations and the government-run companies should be listed as soon as possible, he said.
The volatility in the market had begun with the liquidity shortage in the financial sector, which was worsened by the Grameenphone’s tussle with the telecom regulator over Tk 12,500 crore in dues, sending investors on the edge, the market experts said.
Besides, a huge amount of non-performing loans and irregularities in the banking sector concerned the investors, they said.
The banking sector has been struggling for funds after the December 30, 2018 general election that spilled over into the capital market. The dearth of funds ultimately raised interest rate to increase business cost, they 
said.
Investors were caught off guard by the relentless fall, shedding 775 points in last three months and a half, causing the daily turnover remaining below Tk 300 crore.
Investors were scratching their heads over the continued fall, but they were yet to get any logical answer.
Even the market regulator held several meetings in the past four months to find out the reasons behind the unprecedented fall. 
Critics said that market regulator might take four months to find out reasons for the free-fall in the market either for its inefficiency or for pretending to be a good regulator.
The regulators have been trying to prop up the investors’ confidence with the support from some of the institutional investors, including Investment Corporation of Bangladesh.
National Board of Revenue chairman Md Mosharraf Hossain Bhuiyan on April 2 urged the bourses to ensure that all of their clients possessed Taxpayer’s Identification Number, causing sell-offs. The issue was addressed by the revenue board as it clarified that TIN was not mandatory for all investors in the capital market. 
The market had gained whooping 730 points between December 17, 2018 and January 24, 2019 which was now said to be raised artificially.
Some investors had gone with the tide and invested in the market with an expectation that the market would turnaround after the uncertainty surrounding the national elections erased, the market experts said.
Of the 345 issues traded at Dhaka stocks on Monday, 217 declined, 86 advanced and 44 remained unchanged.
The turnover on the bourse slumped to Tk 298.61 crore on Monday from that Tk 382.97 crore in the previous trading session.
DSE blue-chip index DS30, also dropped by 1.08 per cent, or 20.17 points, to close at 1,835.74 points.
Shariah index DSES shed 0.86 per cent, or 10.42 points, to finish at 1,198.81 points.
Fortune Shoes led the chart of turnover leaders with its shares worth Tk 12.27 crore changing hands on the day.

News Courtesy: www.newagebd.net