Dhaka stocks dip to 10-month low

February 28, 2011

Dhaka stocks continued to collapse on Sunday with the bourse’s general index hitting 10-month low as panic-stricken retail investors went for heavy sell-offs for the fourth day.
The government on the day again asked four state-run banks and the Investment Corporation of Bangladesh to purchase shares to stablise the market but the directive had little impact on the day’s trading.
The general index of the Dhaka Stock Exchange collapsed by 337.58 points, or 5.81 percent, to close at 10-month low at 5463.35 points on the day. The DGEN was at 5467.12 points on April, 18, 2010.
The DGEN shed a massive 926 points in last four trading days as panic spread among general investors while institutional investors took a wait-and-see policy to see the DGEN fall further to purchase shares at cheaper rates.
The DGEN, which started to wobble in December last year after large investors like banks and other financial institutions left the market taking huge profits, have so far lost 3455 points or 38.80 percent since it hit record 8918.51 points on December 5, 2010.
The market capitalisation also dropped by a whopping Tk 1,16,784 crore to stand at Tk 2,51287 crore on Sunday from Tk 368071 crore on December 5, 2010 as capital of many of the retail investors wiped out.
On Sunday, the bourse lost 140 points in five minutes as the floor opened while jittery investors continued with sell-offs to leave the market with whatever they have fearing further crash.
During the trading hours, the DSE posted a news on its website that said the government again ordered four state-run banks and the Investment Corporation of Bangladesh to buy shares from the securities market as a measure to stabilise the market.
But the daily turnover at the burse fell further to Tk 501.27 crore on Sunday from Tk 559.25 crore on Thursday.
The confidence of the investors hit the lowest ebb and as a result good dividend declaration by two non-bank financial institutions resulted in the plunge of share prices of the companies as the market lacked buyers for most of the issues.
Out of the total 255 issues traded on the day, prices of 249 issues plunged while only 6 advanced.
The retail investors, however, expressed their utter aggravation following the announcement of the government that the banks had been asked to buy shares.
They termed the government’s directives as ‘mockery’ and questioned their sincerity in order to stabilise the market.
‘It seem the government is enjoying to make us fools as we proved ourselves enough stupid to believe them,’ Anwar, a retail investors, shrugged.
The investors blasted the government for the empty words as government promises time and again resulted in utter disappointment among them.
Lutfar Rahman, one investor in front of the DSE building, said, ‘The banks do not even care about those orders as it comes from such worthless authority’.
Earlier on the second week of the month, the government had issued similar orders to the institutions as a wake up call following the extreme protest by the investors. The government also allocated a Tk 200 core fund to the ICB to buy shares from the market.
But in the last week, the DGEN had lost 125.41 points, or 2.12 percent on the week. The declining graph brought back
the jittery and anger among the retail investors and made them doubtful about the government measures.
Experts are considering such government directives and frequent orders pointless if those do not yield any result.
Salahuddin Ahmed Kahn, a finance teacher of Dhaka University, said, ‘The government better not embarrass itself by issuing such orders which would not come into effect.’
Salahuddin, who is also a former CEO of DSE, said the amount of investment demanded by the market to came into stability, can only be met if the government invests itself.
‘Otherwise, asking others to buy shares would really not help’ he added.

 

Courtesy of New Age

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