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The Financial Express

DSE new index falls 12pc in Q1 amid virus scare

Core index sheds 10pc during the period under review


Babul Barman | Published: March 31, 2020 10:39:23 | Updated: April 03, 2020 08:59:33


DSE new index falls 12pc in Q1 amid virus scare

The newly-introduced 'CNI-DSE Select Index (CDSET)', comprising well performing companies, tumbled 12 per cent in the just three months amid virus outbreak.

The Dhaka Stock Exchange launched the index on January 1 this year as part of the business and technical collaboration initiatives with its strategic partners in an effort to attract foreign investors.

The new Select Index includes 40 well-performing large companies of the market, based on their present market capitalisation, profit and liquidity. The list of companies will be renewed twice in a year.

The base date of the index is 31 December 2015 with base value of 1,000 points. The DSE officially launched the index on January 1, 2020 with 899.76 points.

The index is jointly designed and developed by DSE and Shenzhen Securities Information Company, a subsidiary of Shenzhen Stock Exchange, the strategic partner of the Dhaka bourse.

The CNI-DSE Select Index lost 12.12 per cent or 109 points in the past three months to close at 790.68 on March 25, 2020, the DSE data shows.

Meanwhile, DSEX, the key index of the main bourse slumped 10 per cent or 444 points in the past three months to settle at 4,008 on March 25 as the pandemic wreaked havoc on stocks.

Market operators said the virus outbreak took a heavy toll on stocks, which prompted the securities regulator to impose circuit breaker to curb the free-fall of stock prices; otherwise the index fall would be doubled.

The investors dumped their holdings including portfolio of many well-performing companies amid growing tension over the economic impact of the virus scare, said a merchant banker.

He noted that well-performing companies like Brac Bank, Grameenphone, United Power, Square Pharma, BATBC and Renata witnessed sharp decline amid panic sell-off during the period under review.

The Brac Bank took a heavy toll, losing 44 per cent in the past three months, followed by GP with 16.44 per cent, United Power 10.23 per cent, Square Pharma 9.0 per cent, BATBC 6.42 per cent and Renata 6.30 per cent.

The coronavirus outbreak will affect the economy in terms of cost escalation, demand slowdown, and job losses if the pandemic sustained for a long period, said a leading broker.

The coronavirus is affecting almost all the listed companies due to the shortage of raw materials that come from external sources, including China, he added.

The largest 40 companies which are included in the index are: Al-Arafah Islami Bank, United Commercial Bank, Prime Bank, Islami Bank, Dutch-Bangla Bank, Eastern Bank, Shahjalal Islami Bank, Pubali Bank, Brac Bank, The City Bank and National Bank from the banking sector.

ICB and IDLC Finance are the two non-banking financial institutes included in the CDSET.

Four top pharmaceutical companies - Square Pharma, Renata, Beximco Pharma and Acme Lab- are also in the index.

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