Stocks experienced a significant drop yesterday due to substantial selling activities, as investors grew worried about inquiries from stock exchanges regarding large transactions. Additionally, concerns over political tensions and the ongoing energy crisis further dampened market sentiment.
The main index of the Dhaka Stock Exchange, the DSEX, plummeted by 103 points, equivalent to 1.83 percent, closing at 5,558, marking its lowest level in approximately two and a half months, as reported by EBL Securities. Following suit, the Chittagong Stock Exchange saw its benchmark CASPI index decline by 171 points, or 1.1 percent.
Having reached 5,903 on August 11, the DSEX had hit its peak since January this year. However, the index has been on a downward trend since then, influenced by persistent concerns surrounding the energy sector and increasing uncertainty regarding the country’s economic situation over the past three years.
In the past month alone, the DSEX has shed around 5.7 percent, equivalent to 336 points. Investor engagement also dwindled, with turnover, a key indicator of trading activity, dropping by 24 percent from the previous day to Tk 545 crore, significantly lower than the Tk 1,342 crore recorded a month earlier.
Out of the 389 securities traded on that day, 348 experienced a decline, while 20 showed gains and 21 remained unchanged. The DSE’s prominent DS30 index, reflecting blue-chip stocks, declined by 1.1 percent to 2,116, marking a 3.4 percent decrease over the past month, according to DSE data.
The market was at 5,589 in February when the current government took office. Subsequently, the index saw an upward trend as investor confidence grew, reaching 5,926 by mid-July. However, a decline ensued following a fire incident at the Maheshkhali offshore LNG terminal in late July, leading to a reduction in imported gas-regasification capacity and a consequent drop in gas supplies to the national grid.
This gas shortage issue exacerbated in the following weeks, affecting various sectors. Saiful Islam, the president of the DSE Brokers Association of Bangladesh, noted that the market has been facing a decline due to the worsening power and gas crisis, resulting in operational challenges for businesses and increased costs, ultimately impacting profits and, subsequently, the stock market.
Furthermore, concerns were raised about the stock exchanges’ practice of issuing queries for relatively large buy or sell orders, affecting investor confidence. Authorities often send inquiries when traders place and cancel significant orders, potentially creating market panic.
Market analysts highlighted that these queries have impacted market turnover and that recent political tensions have added to investor concerns. External pressures from various global events, including the Covid-19 pandemic, geopolitical conflicts, and economic uncertainties, have also contributed to the challenging market conditions.
Experts emphasized the importance of restoring investor confidence through stringent enforcement against market manipulation, improved corporate governance, transparent financial disclosures, and the introduction of fundamentally strong companies to the market. They also called for expediting the IPO process and increasing participation from institutional and foreign investors to bolster market stability and growth.
