There are no transition steps in fragile capital markets
The country’s stock market is in a fragile state with almost continuous decline for two and a half months. The situation has reached such a stage that no one can find a way out.
Many have exited the market with huge losses. Some people have so much loss that they are not able to get out by selling the shares. Many stocks have fallen so much that some people are taking losses even after investing in stocks with the hope of making a profit. As a result, the stock market is not stopping in any way. In the last one week, the capital has decreased by another 8 thousand crores in the capital market. In total, the capital has decreased by about 60 thousand crore rupees in the last two and a half months. There is no effective action by the policy makers to overcome this situation.
Share market-affiliates said that majority of investors have lost confidence. There are more sellers than buyers. One of the reasons for this situation is that after the fascist Sheikh Hasina fled the country in the face of the mass coup on August 5, even though an interim government was formed, the country is unstable due to various reasons.
Despite instability in the political arena, some growth in remittances and export earnings from the diaspora has eased the dollar crisis. It shows some positive changes in the economy. However, due to the way Bangladesh Bank is increasing the policy interest rate to control inflation, the bank interest rate is increasing at an abnormal rate. It is feared that investment in the industry will decrease in the future. On the other hand, the big investors of the stock market consider depositing money in the bank and interest income more secure than investing in shares. This has reduced the liquidity flow in the stock market.
A chief executive officer of a merchant bank, on the condition of anonymity, told our time that the primary reason for the fall in the capital market index is the forced sale of shares bought against trigger sales or margin loans. Many investors borrow money from a broker-dealer to buy shares, then protect the loan even if the broker or merchant forces a sale when the share price falls. As a result the market is in a fragile position. There are no steps to transition from there.
The official said that the market will not turn around due to the recent decisions taken by the regulatory body of the stock market. This can benefit the market in the long run. The biggest crisis in the market is liquidity supply. Interest rates are increasing in the market. The interest rate on margin loans is 16 to 18 percent. While investing in the market, there are losses on the one hand, and interest rates on the other hand are high.
There is no initiative to supply money in the market. On the other hand, the period of spreshal fund for banks in the stock market is ending on January 13. This period should be extended. But there is no initiative in that regard either. Banks will have to sell the shares if the period is not extended. The market will be under selling pressure and uncomfortable. For this market liquidity flow should be increased.
Capital decreased by Tk 12,000 crore: Last week, the capital market was under selling pressure due to recession. 65 percent of investors were desperate to get rid of shares. In contrast, buyers were only 35 percent. Investors are in losses in shares of 19 out of 20 sectors of the capital market. Share prices of most companies have fallen. Overall, market capitalization on DSE fell by 1.84 percent or Tk 12,298 crore last week.
The weekly market analysis shows that two stock market indices were on the decline in the outgoing week. CSE index falls for century The DSE index is now at the border of 5100 points. Last week, all the indices of DSE also fell. The main index DSEX fell by 143.38 points or 2.73 percent. This index now stands at 5 thousand 114.60 points. The DSE-30 index fell by 51.22 points or 2.65 percent. It now has 1 thousand 879.18 points. And the DSES index fell by 30.12 points or 2.57 percent. SME index decreased by 61.60 points to 1 thousand 51.64 points. However, despite the decline in the index, the volume of transactions on DSE increased. DSE’s market capitalization fell by 1.84 percent to Tk 6,56,868 crore. At the beginning of the week, this capital was 6 lakh 69 thousand 166 crores.
During the week, transactions on DSE increased by an average of 20.68 lakh rupees or 6.5 percent. Total transaction in DSE was 1 thousand 693 crore 42 lakh taka. In the previous week, the total transaction was 1 thousand 272 crore 2 lakh taka. In one week, the transaction increased by Tk 421 crore 40 lakh. An average of Tk 338 crore 68 lakh was traded on DSE every working day last week. In the previous week, the daily average transaction was Tk 318 crore. Shares and mutual fund units of 396 companies were traded on DSE during the week. Among them, the share prices of 63 companies increased, 306 companies decreased and 27 companies remained unchanged. Due to high selling pressure, share trading increased by 18.59 million.
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Credit: Dainikamadersomoy
