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2024-06-15 11:38:40

Stock market hits new lows amid investor exodus

Ali Riaz

Stock market hits new lows amid investor exodus

The Bangladesh stock market is plunging to new depths as share prices continue to fall sharply, prompting foreign investors to offload their holdings. Local investors are also facing severe financial distress, losing significant portions of their capital. Brokerage houses, merchant banks, and institutional investors are experiencing the brunt of the downturn, with confidence in the market hitting rock bottom.

Industry insiders attribute the crisis to a long-standing lack of regulatory infrastructure necessary for market stability. Institutional investors are shifting their focus to the money market, exacerbating the liquidity crisis in the stock market.

The timing is particularly troubling for investors, as the downturn persists ahead of Eid. Market analysts note that the stock market has been in decline since before Eid ul-Fitr and has remained depressed for over six weeks. Many investors have seen up to 50 percent of their capital eroded, with little hope of recovery in sight.

Earlier this year, there were signs of a market revival following the Covid-19 pandemic. Share prices had been stabilized with a floor price for an extended period. However, the onset of a dollar crisis last year intensified the price drop, prompting the Bangladesh Securities and Exchange Commission (BSEC) to impose the floor price to stabilize the market. Despite this, the market failed to sustain its recovery.

The situation appeared to improve slightly before June, but the positive trend was short-lived. The BSEC removed the floor price in mid-January, leading to a brief period of price correction and increased trading activity. The market index climbed to a 22-month high of 6,447 points on February 11, with transactions nearing 2,000 crore taka. However, the momentum did not last.

Over the past month, the DSE index has plummeted to 5,117 points. Last week alone, the index dropped 120 points over five trading days, starting at 5,237 points and losing 167 points in just three days. Investors are witnessing their capital deplete daily, with no clear path to recovery.

The market's steep decline continues to challenge the BSEC's efforts to stabilize the situation, leaving investors and stakeholders in a state of uncertainty and financial loss.

(The report was published on print and online versions of The Bangladesh Pratidin on June 15 and rewritten in English by Tanvir Raihan)

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