Dhaka stocks crash, hit 6-year low

Dhaka stocks crashed on Monday, stretching the losing streak to the fourth session in a row, as investors went into massive panic sales after the detection of three coronavirus-infected people in the country.

Dhaka Stock Exchange’s key index DSEX plunged 6.51 per cent, or 279.32 points, to close at 4,008.05 points on the day.

Monday’s mayhem marked the biggest crash in the DSEX history and the crash wiped out 17,291.38 crore in market capitalisation in a day.

The index almost touched the six-year low as it was the lowest after November 3, 2013 when the index was at 3,993.33 points.

The DSEX lost 458.68 points in the last four sessions and 750 points in the last 12 sessions with just two positive sessions.

The sharp loss of points came amid concerns over the global coronavirus outbreak’s impact on the country’s economy and banks’ profitability following the central bank decision to enforce single-digit lending rates.

In line with the previous day, the key index went into a free fall that continued until the end of the session as panicked investors went into rampant selling after the country detected coronavirus cases for the first time, market operators said.

The Institute of Epidemiology, Disease Control and Research on Sunday confirmed the three COVID-19 cases in the country.

Deepening fears about the spread of the infection in the country and its impact on the country’s economy pushed the investors for heavy sales, they said.

Economists warned in last few days that a global outbreak of the coronavirus would hurt Bangladesh’s export and import businesses and any outbreak in the country would cause a severe blow to the economy.

China, where the outbreak has started, is the single largest supplier of industrial raw materials for readymade garment and other sectors of Bangladesh.

The US, Italy, Spain and France, which have also been affected by the virus, are major export destinations of Bangladesh.

Besides, many negative macroeconomic indicators, including the falling credit and deposit growth in the private sector and the declining export earnings, have also led the market to the downward turn.

Major stock markets around the globe have been plunging for the last few days due to the fears of a coronavirus-fuelled global economic recession.

The DSE will sit with the managing directors of the scheduled banks tomorrow to discuss the recent facility for the banks to form special funds to invest in the stock market.

DSE officials said that banks appeared reluctant to accept the facility, for which the stock exchange planned to have a discussion with the banks and influence them to invest in the market.

Of the 356 scrips traded on the bourse on Monday, 304 declined, just two advanced and one remained unchanged.

Of the 356 companies, the share prices of 124 issues declined over 9 per cent on the day.

The average share prices of all the sectors plummeted on the day.

The share prices of the textile sector dived 8.5 per cent, non-bank financial institutions 7.1 per cent, telecommunication 6 per cent, pharmaceuticals 5.9 per cent and banks 5.4 per cent.

The turnover on the DSE increased to Tk 499.35 crore on Monday from Tk 428.92 crore in the previous trading session on heavy sales.

EBL Securities in its daily market commentary said that indices on the DSE had the staggering plunge while the core index DSEX went down 279.32 points or 6.52 per cent, its deepest dive since inception, as the virus continued to heavily weigh on investors’ confidence after three infected cases were found in the country yesterday.

‘Making matters worse, the sell-off carried over from the beginning of the session and continued till the end owing to investors’ concerns over the unforeseen shock to the economy due to this corona jeopardy,’ said the commentary.

 ‘The virus has emerged to be a new problem for Bangladesh’s economy, which is already under stress due to several macroeconomic conditions,’ it also said.

Bangladesh Securities and Exchange Commission former chairman Faruque Ahmed Siddique told New Age that the presence of the virus in the country might be one of the reasons behind the Monday plunge.

He also said that the market had been struggling for the last two weeks with heavy fall in some of the sessions that might provoke the investors for sell-off shares.

BRAC EPL Stock Brokerage Limited’s chief executive officer Sharif MA Rahman said that the nosedive in the market was the impact of the global concerns over the coronavirus outbreak.

He said that global stock markets also saw a sharp fall, with oil prices heavily dropping on the day due to the coronavirus.

Market operators said that finance minister AHM Mustafa Kamal’s recent remarks were also not helping the market as he was brushing aside the government’s responsibility towards the stock market.

Kamal on March 4 at a seminar said that it was not his task to monitor ups and downs in the stock market dampening investors’ mood.

The finance minister on Sunday expressed his disappointment over the county’s share market, saying that it did not reflect the country’s economic progress.

DSE blue-chip index DS30 plummeted 6.19 per cent, or 88.89 points, to close at 1,346.11 points on the day.

Shariah index DSES lost 6.98 per cent, or 69.79 points, to end at 929.27 points.

Square Pharmaceuticals led the turnover chart with shares worth Tk 15.64 crore changing hands on the day.

Grameenphone, LafargeHolcim Bangladesh, Summit Power, Sea Pearl, BRAC Bank, Orion Infusion, Bank Asia, VFS Thread Dyeing and Orion Pharmaceuticals were the other turnover leaders.

News Courtesy: www.newagebd.net