The Dhaka Stock Exchange has experienced a significant decrease in its market capitalisation, by Tk聽1,07,996.16 crore, in less than three months, as investors sold shares heavily following the withdrawal of floor price restriction.
Market operators said that many investors had failed to take exit or reshuffle their investments due to prolonged floor price restriction in the market.
The withdrawal of floor price restriction on January 18 availed investors to adjust their portfolios, they said.
The Bangladesh Securities and Exchange Commission imposed the floor price restriction on all companies on July 28, 2022 to prevent any excessive fall in share prices amid economic woes in the country.
Market operators said that the market was struggling with confidence crisis, manipulation and the government鈥檚 apathy.
According to the data published by the Dhaka bourse, the market capitalisation declined by 13.70 per cent to Tk聽6,79,908.62 crore on April 4 from Tk聽7,87,904.78 crore on January 18.
The market capitalisation of the DSE includes the market value of all listed companies, bonds, treasury bonds and mutual funds.
Market experts said that the market went through an adjustment period which was due for a long time for the floor price restriction.
Former BSEC chairman Faruq Ahmed Siddiqi told 抖阴精品 that it appeared that the stock market investors were still haunted by the market debacle in 2010 when the market suffered a bubble-bust.
鈥楾he stock market is a place for the investors to enter and exit easily. But the investors were unable to liquidate their funds due to the floor price restriction,鈥� he said.
鈥楾here is a liquidity crisis in the market, as banks have to give the government high amount of cash daily for many reasons. High inflation rate and foreign currency buying are another reason for which money flow to the capital market has decreased,鈥� he added.
The DSE key index, DSEX, lost 8.53 per cent, or 540.63 points to settle at 5,796.12 points on April 4 from 6,336.75 points on January 18.
Market operators said that as the market saw a sharp fall, investment of many investors fell into the margin call or forced sales, which fuelled the selling pressure during the period.
The country鈥檚 economy is struggling with a host of reasons, including high inflation, pressure on exchange rate, falling foreign exchange reserve, dollar crisis and energy crisis, which have reduced business production.
After the Bangladesh Bank lifted ceiling on loan interest rate, the lending rate has continued rising that also increased business costs, while rising deposit rate and treasury bonds rate pulled many investors towards banks, market operators said.
Investors are facing financial losses when selling shares due to the decrease in the market value, as the prices of securities decreased, they said.
The prolonged volatility in the market caused many investors to realise their funds, and remain on the sidelines, they said.
According to the data published by the Central Depository Bangladesh Limited, the total number of beneficiary owner鈥檚 accounts with zero balance was 2,98,155 on January 19, 2024, which increased to 3,55,801 accounts as of April 5, 2024.
Prices of the junk stocks rose in the period, which made investors cautious about the market. On the contrary, share prices of good companies fell in the period.
DSE Brokers Association of Bangladesh president Saiful Islam told 抖阴精品 that manipulation took place when the price of a share was being built up.
鈥楾he regulatory authority should keep focus on price build-ups in the market to prevent manipulation,鈥� he said.
He also mentioned delay in the market correction, inflation and liquidity crisis as some of the major reasons for the market capitalisation decrease.
BSEC spokesperson Mohammad Rezaul Karim, also an executive director of the regulatory body, said that they wanted the market to function at its own pace.
鈥業 think the market will turn around soon from its current situation. We are monitoring the market closely and have made the surveillance stronger. If there is any manipulation at play, action will be taken immediately,鈥� he said.
鈥楿sually investors shift towards other business opportunities in the month of Ramadan, and funds from the capital market go out of the market,鈥� he said.
