Stocks plunge for 3rd day on US travel alert, banks’ exposure cut rumour [ Tritiyo Matra News ]

Stocks plunge for 3rd day on US travel alert, banks’ exposure cut rumour

Local October 19, 2015

Freefall of Dhaka stocks continued for the third trading session on Sunday as the latest travel alert of the US, concern over quarterly performance of some companies and rumours about banks’ move to cut stock exposure haunted investors.
The key index of Dhaka Stock Exchange, DSEX, plunged by 1.46 per cent or 68.59 points to close at 4,608.03 points on Sunday, hitting fresh three-and-half-month low.
Market operators said that the investors’ sentiment jolted again after the US on Saturday again updated its travel alert for Bangladesh raising security concerns.
Before Sunday, investors’ confidence had been on the wane for the last few trading sessions following news reports about the impact of the killing of two foreign nationals on the country’s economy.
Besides, poor corporate disclosures of some companies for third quarter also affected the investors’ mood, they said.
On Sunday, heavy selling of multinational company, Lafarge Surma, dampened further the overall mood of the market.
An official of a brokerage house said a rumour swirled among the investors on Sunday that banks and their subsidiaries went for heavy selling of shares, especially Lafarage and GP, to cut down their capital market exposure.
‘Lafarge was considered as a long-term safe investment. But for the last few days, share of the company was heavily hit creating panic among the investors who ran for saving their capital,’ he said.
There is a speculation in the market that Lafarge’s earning per share for third quarter would not match last year’s performance as the company’s half-yearly performance remained below par.
As per the latest banking company act, the banks are supposed to cut down their capital market exposure by June 2016 while the capital market subsidiaries have been demanding that government extends the deadline.
‘It might be Bangladesh Bank’s role which has been hitting the market in the recent times as it creates pressure on the institutional investors, especially on the banks’ subsidiaries, to adjust capital market exposure,’ former DSE senior vice president Ahmad Rashid told New Age.
He also said that the central bank along with Bangladesh Securities and Exchange Commission should come up with a long-term solution to overcome the situation.
On the other hand, third quarterly earning reports of several banks, non-bank financial institutions and multinational companies, which have already been disclosed, failed to fulfill investors’ expectation. As a result, investors went for heavy share sales fearing same sort of reports from other companies which will be declared in the coming days.
EBL Securities managing director Sayadur Rahman, however, said that the investors were over reacting in the recent time regarding deferent issues.
He also said that capital market exposure adjustment by the banks will not create any significant pressure over the market as most of the banks are within the stipulated limit in terms of capital market exposure.
Due to investors pessimism over the earning prospect of Lafarge Surma Cement, the prices of the entity fell by 6.64 per cent or Tk 5.80 on Sunday before closing at Tk 83.10.
Lafarge shares were traded at Tk 110.9 on September 28, the day an Italian NGO worker was killed in the city.
DS30, the blue-chip index of DSE, fell by 1.30 per cent, or 23.01 points, to close at 1,743.48 points on the day.
DSES, the Shariah index of the bourse, closed at 1,094.59 points, shedding 1.81 per cent or 20.23 points.
Of the 317 shares and mutual funds traded on the day, 44 advanced, 250 declined and 23 remained unchanged.
Turnover of the bourse declined to a six-and-half months low at Tk 310.89 crore on Sunday.
‘Weekend could not pacify investors’ sentiment, rather escalated fear which accelerated market’s unconstrained nosedive for third consecutive session,’ IDLC Investments said in its daily market commentary.
‘Buyers dared not to put resistance against the spooked animal spirit that dominated the market,’ IDLC said.
Amid heavy fall in prices, Lafarge Surma Cement led the turnover chart on the day with its shares worth Tk 46.65 crore changing hands.
BSRM Steels, Saif Powertec, KDS Accessories, Beximco Pharma, Square Pharmaceuticals, BSRM Limited, Grameenphone, United Airways and CVO Petrochemical Refinery were among other turnover leaders.
Industrial Promotion and Development Company of Bangladesh gained the most with a 7.98 per cent increase in its share prices, while Saif Powertec was the worst loser, shedding 22.64 per cent.