FE Report

Panic sale of shares due to declining confidence among the investors pulled down the Dhaka Stock Exchange (DSE) main index DGEN further 474.77 points Sunday. This big fall aroused their anger and prompted demonstration by them in front of the DSE building.

The benchmark DSE General Index (DGEN), the yardstick of the market, shed 7.27 per cent or 474.78 points to end at 6052.41 on the day.

The index shed more than 1,500 points or 20 per cent in the last two weeks while it was down by 32.0 per cent from its peak value of 8,918.51 points as on December 5, 2010.

On the day, seeing a large part of their investment vanishing within a few days, majority of the investors fell in despair and demanded resignation of the Prime Minister, the Finance Minister and Chairman of parliamentary standing committee on finance ministry AHM Mostafa Kamal.

Market analysts said the government decision to offload shares of state-owned companies in a ‘liquidity and confidence-crunch’ market also pressed the free fall of index on the day. They also attributed poor dividend declaration by some of the listed companies to the major fall.

“When the market was over-flooded with liquidity government failed to offload shares of state-owned companies. Now, when the market is falling continuously due to lack of liquidity support, market cannot absorb new companies’ shares,” said a leading merchant banker, seeking anonymity.

Criticising the dividend declaration policy of some companies he said, investors need boost-up measures from the companies at the time of crisis. But poor dividend declaration by some companies is hurting investors’ confidence badly, he added.

Ahmed Rashid Lali, former senior vice president of DSE, said, many institutional buyers are getting ready to buy state-owned companies’ shares but their participation is still low in the market.

He said, the poor dividend declaration by Dutch Bangla Bank also had a negative impact on the investors’ mind.

Meanwhile, investors came to the street at around 12:00 A.M when DGEN shed 183 points. Some angry protesters hurled big-size brickbats from Modhumita Building at the police. At around 12:10 in DSE trading there was not even a single gainer out of all the shares traded.

As the day progressed, the index continued to fall and protest among the investors intensified. The investors stopped vehicular movement from Shapla Chattar to Ittefaq crossing from 12 A.M to 3:30 P.M. The investors relentlessly chanted slogans to save their invested money from the so-called looters.

At one point DGEN lost more than 500 points although it regained a bit during the closing of the trade. DGEN closed the day with a mammoth 7.27 per cent fall. Market insiders said that the fall would be bigger if circuit breaker was not imposed on individual companies.

The broader DSE All Shares Price Index (DSI) ended at 5020.48, shedding 7.18 per cent or 388.62 points. The DSE-20 including blue chips dropped 6.33 per cent or 274.89 points to 4064.44.

On the day, Dutch Bangla Bank declared 30 per cent cash dividend which apparently failed to meet the investors’ expectation as the Bank’s shares lost a mammoth 33.47 per cent or Tk 657.25 after the corporate declaration.

The private sector bank’s declaration was hurting the sentiment of investors badly prompting other shares to lose price in a big margin on the day. All sectors lost more than 6.0 per cent except mutual funds which lost 1.9 per cent

With the declaration of offloading of more state-owned companies’ shares, most of the already listed state-owned companies shares saw no buyers from the beginning of the trading session.

However, the day’s total turnover increased to Tk 7.16 billion in value terms, which was 27.0 per cent higher compared to the previous session.

National Bank continued to top the turnover list with shares worth Tk 361.35 million changing hands. Among others, UCBL, Beximco Limited, People’s Leasing, Titas Gas, GP, Southeast Bank, DBBL, United Airways and Bextex were in the top turnover list.

Seventh ICB was the day’s highest gainer posting a rise of 4.72 per cent followed by Fourth ICB and Jute Spinners.

The day’s other prominent losers included RAK Ceramics, Glaxo SmithKline, Phoenix Insurance, CMC Kamal, City General Insurance, Quasem Drycells, Alltex Industries and Meghna Condensed Milk.

A total of 63.83 million shares changed hands on the day against 50.54 million of the previous trading session. The number of trade deals also increased to 151,499, which was 115,894 Thursday.

The total market capitalisation came down to Tk 2760.88 billion against Tk 2938.38 billion in the previous session.