The stock market passed yet another gloomy year as the core index of the Dhaka Stock Exchange (DSE) eroded more than 26 per cent in the outgoing Financial Year (FY) 2019-20.
After the stock market crash in 2010-2011, the government came up with some instant market supportive measures. The market even after 10 years of a fragile journey failed to get a strong foothold, as investors were discouraged by one issue after another.
Market operators said the market has been in the doldrums throughout the FY 2019-20 amid investors' confidence crisis while liquidity crunch in the banking sector, gloomy macroeconomic outlook and Covid-19 outbreak exacerbated the situation.
The stock market stepped into the new FY 2020-21 amid concern over the depressing macroeconomic outlook, unprecedented economic uncertainties with a little hope of an immediate market recovery amid ongoing Covid-19 crisis.
The pandemic-induced shutdown has battered the business of the listed companies as operations were closed for two months as part of a government effort to contain the virus and the demand has collapsed.
Trading and settlement activities on the bourses remained closed for 66 days (March 26 to May 30), the longest closure of the market since the Liberation War, due to government holiday as part of its efforts to contain the spread of the deadly virus.
The DSE key index reached highest at 5,384 while dipping to 3,603 on March 18, 2020 which prompted the securities regulator to set floor price of all stocks on March 19 to prevent free-fall of the index amid the Covid-19 pandemic.
Between July 01, 2019 and June 30, 2020, DSEX, the prime index of the DSE, lost 1,432 points or 26.56 per cent to close at 3,989 on Tuesday.
Most surprising that the large-cap stocks, considered as blue chips, suffered most during the outgoing financial year as foreign investors' pulling funds out of the market that worsened the situation.
The blue-chip index DS30, which groups 30 prominent companies, lost 589 points or 30.50 per cent to come down to 1,340 on Tuesday.
The DSE Shariah complaint Index also plunged 319 points or 25.68 per cent to close at 925.
Market capitalisation of the prime bourse also shed 22 per cent in the outgoing year to Tk 3,119 billion.
The daily turnover, another important gauge, stood at Tk 3.81 billion on an average, down by 47 per cent year-on-year, in the FY 2019-20.
The daily turnover at the DSE tumbled to a 13-year low twice in June as jittery investors were unwilling to buy shares even at the lowest possible prices amid growing concerns over the Covid-19 pandemic.
Observing the overall market scenario in the outgoing financial year, investors felt a pinch of the market crashes occurred in 1996 and 2010. Therefore, investors became panicky and rushed for an exit from the market, said a merchant banker.
A leading broker said the free-fall in the trusted securities like GP, Square Pharma, British American Tobacco, United Power and BRAC Bank left no option for investors but to leave the market.
Brac Bank stock eroded 50 per cent, United Power 41 per cent, Square Pharma 35 per cent and BATBC 34 per cent in the outgoing financial year.
The largest market-cap GP stock plunged more than 34 per cent during the financial year which impacted the overall market.
The broker said the continuous falling share prices triggered the panic sale, pulling the market further down with dismal macroeconomic outlook accelerated the free fall.
The government's market supportive measures, including redefining the banks' capital market exposure and amending public issues rules, failed to boost the fund flow.
"The investors had run for exit after the market crash in 2010-11 with fear and anger, and their confidence is yet to be resorted," said an analyst.
The big players behind the crashes are yet to be punished, which is one of the key reasons that the investors could not get back their confidence in the market, he added.
The financial sector is not performing well as investors are suffering from confidence crisis due soaring non-performing loans, which hit the bank stocks hard, while Covid-19 pandemic shattered their confidence, he added.
In a major development, the Bangladesh Securities and Exchange Commission got new chairman and members as the government appointed Professor Shibli Rubayat Ul Islam as the new chairman of the BSEC along with four members for the next four years in May.
