The benchmark index of Dhaka Stock Exchange (DSE) fell below the ‘psychological’ threshold of 4,500-mark on Sunday amid growing concern about the country’s overall economy.
DSEX, the equities index, wiped off 15.95 points or 0.35 per cent to settle at 4,498, the lowest in more than 41 months since July 10, 2016, when the index was 4,495.
The DSEX has shed a cumulative 212 points in the past one month and 1,452 points since January 24 this year when the index peaked at 5,950.
The market capitalisation also eroded Tk 116 billion in just one month and Tk 766 billion in the past 11 months, the DSE data show.
The market slide began early in the year and the fall intensified since the budget for fiscal year 2019-20 was passed in parliament on June 30, 2019 without any significant incentive for the market.
Following the free fall, the government took some market-supportive measures, including redefining the banks’ capital market exposure and amending public issues rules, but to no avail.
Market insiders said investors had been suffering from a lack of confidence for long and the growing concern over the economy, dearth of quality stocks and liquidity crunch deepened the confidence crisis.
The institutional investors also failed to play a supportive role amid liquidity crunch while prolonged bearish trend prompted foreign investors to continue pulling out funds, worsening the situation, said an analyst who declined to be named.
The foreign investors withdrew a record amount of Tk 857 billion in the last nine months (March-November) this year from the premier bourse.
The analyst also noted that the continuous fall in the private sector credit growth, declining export earnings, poor tax revenue collection and heavy bank borrowing by the government kept most investors on the sidelines.
The ongoing erosion in stock prices also reduced the investment ability of the market intermediaries and high net worth investors, he pointed out.
Some brokerage firms also resorted to forced sales to minimise risks in margin loans, he added.
Khairul Bashar Abu Taher Mohammed, secretary general of Bangladesh Merchant Bankers Association, said the index dropped to 41-month low amid investors’ lack of confidence on the market.
Mr Bashar, also the CEO of MTB Capital, said investors remained cautious about the possible impacts of unexpected slowdown in some macroeconomic indicators on the stock market.
He emphasised the need for bringing good and reputed companies to the market and ensuring good governance to restore the investor confidence.
In its regular market analysis, EBL Securities said worried investors continued dumping their holdings amid depressed macroeconomic outlook, which further impacted the overall performance of the capital market.
Turnover, a crucial indicator of the market, also fell to Tk 3.06 billion on Sunday, down 12 per cent from the previous day’s turnover of Tk 3.49 billion.
