DSE crash to its lowest in five years

Dhaka stocks plunged to its five-year low yesterday amid coronavirus-induced sell-off as fears grew that the fast-spreading disease would hurt both global and local economies and the earnings of listed companies.

DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), lost 160.64 points, or 3.88 per cent, to close the day at 3,969.31 — the lowest since May 4, 2015, when the market ended at 3,959.73.

With the slide, the index slipped below the 4,000-mark for the first time in five years. On March 9, DSEX plunged 279.32 points.

The value of the stocks shed 7.95 per cent to Tk 311,113 crore in a span of 11 trading days this month. Turnover, another important indicator of the market, dropped 8.7 per cent to Tk 396.9 crore yesterday.

“Investors are panicking owing to the recent fall, so many of them sold off shares,” said Mostaq Ahmed Sadeque, a former president of the Dhaka Stock Exchange Brokers Association.

Yesterday, a group of investors urged the bourse to stop trading in order to halt the massive fall and give some relief to nervous investors.

On Saturday, the government confirmed that two more Bangladeshis tested positive for coronavirus, raising the tally to five.

The World Health Organisation on Wednesday declared the novel coronavirus outbreak a pandemic. The number of coronavirus cases around the world totalled more than 156,400, according to data from Johns Hopkins University, with 5,833 deaths.

The virus has found a foothold on every continent except for Antarctica, spreading to 142 countries and territories so far.

“The coronavirus affected stock markets worldwide and local stock investors fear that it would hamper the economy and hammer the earnings of the listed companies,” said Sadeque, also the managing director of Investment Promotion of Services, a brokerage house.

Banks have started to inject funds in the market by taking loans from the Bangladesh Bank under a special package drawn up to prop up the ailing market. The move had lifted the mood of investor to some extent. But the positive sentiment was short-lived in the face of growing threat of coronavirus, Sadeque added.

Eight banks mobilised funds to invest in the stock market under the special package and three more banks are set to follow suit this week.

On February 10, the central bank announced a package for banks, allowing them to set up funds worth Tk 200 crore each on the back of the financial support.

The lenders will take the fund from the central bank through repurchase agreements against treasury bills and bonds owned by them. The banks will have to pay 5 per cent interest for the fund and the credit tenure will be until February 2025.

The Bangladesh Merchant Bankers Association (BMBA) yesterday sat with the BB higher ups at a meeting at the central bank headquarters in Dhaka. BB Governor Fazle Kabir chaired the meeting.

“The central bank is candid about increasing liquidity to the stock market and it is working. Now the stock index is going down and this is maybe due to the coronavirus,” Md Sayadur Rahman, president of the association, said.

The BMBA met with the governor as a number of banks have not set up the fund yet.

The central bank announced the package to boost the morale of investors. After the assistance was unveiled, the benchmark index edged up. However, it started to fall again last week when three tested positive for the virus in what was the first incidence of the lethal, pneumonia-like virus in Bangladesh.