Weekly Review: Dhaka Stock Market sees gains despite sluggish stocks

Dhaka, 15 Feb - The Dhaka Stock Exchange (DSE) experienced an upward trend over the past week, with both indices and market capitalisation showing gains.

However, despite this positive movement, the influence of poorly performing shares remains significant.

A review of DSE’s weekly report reveals that, among the ten most-traded stocks in the past five trading days, only two belong to the A-category.

The remaining eight comprise three mid-tier B-category companies and five poorly performing firms that have not paid dividends.

New Line Clothings Limited topped the trading chart throughout the week. The company last issued dividends in 2021 and held its last annual general meeting in 2022. Since then, it has remained in the Z-category, offering no returns to investors.

Another Z-category company, Apollo Ispat Complex Limited, secured the third position in terms of trading volume. Despite failing to pay dividends since 2016, it continues to attract investor interest.

DSE director Minhaj Mannan Emon noted that the index’s rise amidst liquidity constraints has led many investors to target low-quality shares for quick profits. This trend inflates the value of underperforming stocks and increases market risks. Manipulators exploit misinformation to drive up these shares, leading to financial irregularities.

It is not just companies taking advantage of market instability; several brokerage houses have also been implicated in manipulation. According to the Bangladesh Securities and Exchange Commission (BSEC), four brokerage houses have recently been accused of defrauding investors of approximately Tk 300 crore through fraudulent software.

The banking sector lagged behind in trading throughout the week, with share prices dropping by 23.72% over five trading days. The sector’s index declined from 648 points to 494 points.

Similarly, the insurance sector also witnessed a downturn, with share prices falling by 16.62% during the same period.

In contrast, financial institutions performed well, with share prices increasing by 6.68%. The energy sector also saw significant growth, with share prices rising by over 35%.

Over the five-day period, DSE’s key index, DSEX, increased by 22 points, while the blue-chip DS30 gained 6 points, and the Shariah-compliant DSES rose by 7 points.

Out of all the companies traded, 183 saw price increases, 166 experienced declines, and 49 remained unchanged.

While the average daily turnover on the DSE dipped by around 1% over the week, total market capitalisation rose by 2.35%.

Beyond regular trading, the block market saw transactions worth Tk 106 crore. Among these, ACI Limited recorded the highest trading volume, selling shares worth Tk 25.50 crore over five days.

The ceramics sector generated the highest returns during the week, while financial institutions, life insurance, and general insurance were at the bottom in terms of profitability. Overall, market returns increased by 0.50%.

Last week, for the first time, the task force on stock market reforms submitted its initial two recommendations to the BSEC.

Market analysts believe that the adoption of these recommendations, which focus on margin loans and mutual funds, could stabilise the volatile stock market.