The stock market suffered its biggest single-day drop in 12 months yesterday as worried investors sold off fearing a free fall after the government reinstated strict measures to curb the surge in coronavirus infections.
The DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), fell 181 points, or 3.44%, to 5,088, the lowest level in three months.
On March 16 of last year, the key index plunged 196 points due to the spread of the virus in the country.
People are panicked, so they sell stocks, said Yawer Sayeed, CEO of AIMS Bangladesh, an asset management company.
“The pandemic situation is deteriorating rapidly and I prefer to stay in the dark,” said Nahid Niaz, a stock investor.
“If the market closes, we’ll be in trouble. So a lot of stocks sold.”
Last year, the market was closed for about two months after the government imposed a strict nationwide lockdown to stop the spread of the rogue virus.
Bangladesh Securities and Exchange Commission (BSEC) chairman Professor Shibli Rubayat Ul Islam said the stock market has not closed all over the world when the economy remains open.
“We cannot remain detached from the world, so we will not close the market,” he said yesterday during a program of the Capital Market Journalists’ Forum.
In the afternoon, the BSEC set the new trading session from 10:00 a.m. to 12:00 p.m., instead of 10:00 a.m. to 2:00 p.m. now. The new trading hour goes into effect today.
Yesterday, the central bank reduced the opening hours of banks in accordance with the new restriction on movements. Customers will be allowed to settle financial transactions from 10:00 a.m. to 12:30 p.m. on regular business days.
“The Covid-19 crisis is not going to evaporate any time soon. So we will have to manage our economy and the stock market in this new situation,” said Professor Islam.
“Trading is not difficult because investors can place orders digitally.”
The market downturn is not for Covid-19 and the lockdown; rather, it is the culmination of a few elements that have been prevalent in the market for years, according to Yawer Sayeed.
The crisis of confidence and the fundamental problems were the main reasons for the fall, he said.
Sayeed said the market is based on debt rather than savings. People invest in the market by taking loans, and lenders are incentivized by the government, not by investors, he said.
“So people want to keep money in their hands. Some are trying to save their wallets from hard sell.”
If investors buy stocks on margin loans and the stock price falls below a certain level, lenders sell the stocks to save the investment.
“If it was a savings-based market, people wouldn’t sell stocks because the market would stay open and trading activities wouldn’t close. So it’s clear that they’re not selling stocks. actions only because of Covid-19, “said the added director asset.
A broker said the market was down due to the panic. “Many investors believe the market will go down further. This trend is contagious and leads to massive sales.”
Investors should realize that the market will rebound soon, and they shouldn’t be selling stocks of good companies, he said.
Revenue, an important indicator of the market, increased 15.52 percent to Tk 521 crore from Tk 451 crore in the previous session.
In the DSE, only seven companies advanced, 251 declined and 66 remained unchanged.
Beximco Ltd tops the list for turnovers, with its shares valued at Tk 70 crore changing hands, followed by Robi Axiata, Beximco Pharmaceuticals, Asia Pacific Insurance and LankaBangla Finance.
Paramount Insurance lost the most, dropping 12 percent, followed by Dominage Steel, Golden Son, IFIC Bank and SS Steel.
The Chattogram Stock Exchange also experienced a massive drop. The port city’s general stock exchange index, CASPI, fell 542 points, or 3.55 percent, to end the day at 14,714.
Of the shares traded, 13 rose, 184 fell and 19 remained unchanged.
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