Friday, June 14, 2024

Liquidity crunch sends Dhaka stocks on the edge

Turnover of Dhaka Stock Exchange hit a new two-month low on Tuesday because of liquidity crunch as the institutional investors remained inactive and individual ones cautious following the latest bear run of the market for the last three weeks.
The DGEN, benchmark general index of Dhaka Stock Exchange, on Tuesday lost 60.02 points, or 0.97 per cent, to finish the day at 6,112.27 points. In the latest bear run that started from July 24 the DGEN lost 598 points until Tuesday.
Turnover on the day dropped to Tk 354.29 crore compared to that of Tk 439.89 crore in the previous day. On June 20, the turnover was the lowest since Tuesday at Tk 341.98 crore.
Turnover of the bourse posted a record high of the year during July-August but it has been decreasing for the last three weeks amid fresh volatility in the market. On July 24, the turnover rose to Tk 1957.92 crore from Tk 954.84 on June 30 following the passage of the provision of allowing investment of undisclosed money in the stock market by paying 10 per cent tax.
But the turnover started to fall due to a number reasons including poor corporate disclosure by a number of listed companies, Bangladesh Bank’s tight monetary policy and Securities and Exchange Commission’s announcement of taking legal action against some suspected market manipulators.  As of Tuesday, it came down to Tk 354.29 crore.
‘Retail investors who were panicked after the market regulator’s declaration of taking action against market manipulators have become cautious now and are waiting to see how the market reacts after the declaration came into action,’ said a stockbroker.
He said, ‘The institutional investors who injected money into the market in early July have left the market for now as well and also waiting to buy shares at a cheap rate with the hope that the market will comedown further.’
For last three weeks, the market has been in a negative zone with the first bear run after the passage of finance bill for the current fiscal.
‘The national budget also did not indicate any better future for the overall economy and the capital market,’ he said. 
He also said that the government move to downsize the capital market exposure of the non-bank financial institutions also had an impact on the market. 
Another stockbroker said, ‘The mutual funds are completely inactive whereas they should buy shares at this point to support the market.’
Asked about the matter, Yawar Sayeed, managing director of AIMS Bangladesh Ltd, said, ‘The unit holders are the people to whom any mutual fund is primly responsible as they have invested their money trusting MFs’ expertise.’
‘Mutual funds also need to pay dividend to their unit holders so they surely try to make the best investment decision for their clients,’ he said.
He also explained that as the market is going through a downtrend, like any other investors the mutual funds are also taking their investment decision more carefully.
Of the 255 issues traded on Tuesday, 22 advanced, 224 declined and nine remained unchanged.
Beximco topped the turnover leaders on the day with shares worth Tk 18.42 crore changing hands. The other turnover leaders were United Airways, MJL Bangladesh, Grameenphone, City Bank Ltd, MI Cement, One Bank Ltd, Malek Spinning, Lafarge Surma Cement and Keya Cosmetics.

-With New Age input

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