Stocks extend fall amid market exposure concerns
The rumour was that the central bank has been verbally instructed to go soft on the banking industry’s capital market exposure
Indices at the Dhaka and Chattogram bourses declined further on Sunday as concerns regarding the capital market exposure of non-bank financial institutions (NBFIs) re-emerged among investors.
DSEX, the broad-based index of the Dhaka Stock Exchange (DSE) dropped 0.93% to 6,926 points, following a 0.7% fall on Thursday.
"Most investors preferred selling their holdings because of the Bangladesh Bank's recent circular regarding the capital market exposure of NBFIs, according to Sunday's daily market commentary of EBL Securities.
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Last week, the central bank issued a clarification stating the elements that should and should not be treated as capital market exposure of NBFIs.
Stockbrokers said the central bank did not change anything in this regard, but investors reacted negatively because it watered down a recent rumour that had helped increase their optimism.
The rumour was that the central bank has been verbally instructed to go soft on the banking industry's capital market exposure.
The central bank's attitude towards the capital market exposure of its regulated entities has emerged as an important psychological factor among stock investors, as they have been observing selling pressure as soon as the central bank goes tough against banks' overexposure to capital market instruments.
Recently, the Bangladesh Bank also asked the Bangladesh Securities and Exchange Commission to opine on too many unrealised loans of NBFIs to their capital market subsidiaries that are included in their market exposure.
This also added to the worries of short term investors, stockbrokers added.
Investors went for aggressive selling as soon as the DSEX broke below the psychological threshold of 7,000 points on Thursday as they feared the downward momentum might get stronger.
Out of the 385 issues traded in the DSE, 77 advanced, 270 declined, and 38 remained unchanged.
Amid an increased selling pressure, daily turnover in the DSE increased 8.3% to Tk1,140 crore.
On the sectoral front, tannery came up as the most traded sector in the DSE with a 23% contribution to the daily turnover, while pharmaceuticals and engineering sectors contributed around 10% separately.
Most of the sectors suffered price correction. Of them, the IT, NBFI, and life insurance sectors led the fall on Sunday. On the other hand, the jute sector's market capitalisation gained more than 4%.
Indices of the Chittagong Stock Exchange also tumbled into red terrain. Broad index CSCX dropped 140 points to 12,144.
Daily turnover in the port city bourse increased to Tk37.6 crore from Tk34.7 crore.
