Growing virus fears and floor price rule keeps investors on the sidelines

The daily turnover at the Dhaka Stock Exchange tumbled to a 13-year low as jittery investors were unwilling to buy shares even at the lowest possible prices— set by the regulator’s floor price rule amid growing concerns about the Covid-19 pandemic crisis.

Only Tk38.6 crore changed hands on Sunday in the country’s prime bourse, slumping from Tk69.7 crore in the previous session.

This marks the lowest single day turnover since April 23, 2007, when the transactions totalled Tk 37.69 crore.

With investors on the sidelines, the market ended almost flat on the opening day of the week.

The benchmark DSEX edged up by 0.06% or 2.4 points to close at 3,963.98 points during the three-hour trading session. Only 17 scrips gained, 14 others dropped in price, while 214 remained unchanged.

Market insiders say institutional investors are reluctant to trade, cautious amid the coronavirus crisis, which is one of the reasons for the slump in trading.

The floor price rule imposed by market regulators has held back many investors from trading, they added.

After the coronavirus pandemic unfolded in the country, the Bangladesh Securities and Exchange Commission (BSEC) on March 19 introduced the floor price rule, based on a five-day average price of shares. It was initiated to control price swings as stocks began to tumble amid virus fears.

Throughout Sunday’s trading sessions, investors remained cautious as there were no signs that the coronavirus situation was improving, according to the daily market commentary by EBL Securities Ltd.

Most of the scrips remained stuck on the trading floor amid mixed reactions from investors concerning earnings, dividend declarations, and the floor price rule, it added.

Pharmaceutical shares accounted for 44.2% of the daily turnover followed by fuel and power with 16.6%, banking at 12%, and telecoms 8.3%, says the UCB Capital Management Ltd’s daily analysis.

Linde Bangladesh Ltd ruled the turnover board on Sunday with its shares worth Tk3 crore changing hands. Its price closed at Tk1,305.

Central Pharmaceuticals came in second with a turnover of Tk2.9 crore followed by Beximco Pharmaceuticals with Tk2.5 crore, Reckitt Benckiser with Tk1.8 crore, and Bangladesh Submarine Cable Company with a Tk1.6 crore turnover.

Eastern Lubricants was the day’s top gainer with its price going up by 5.9%. It was followed by Ambee Pharmaceuticals Ltd up 5.4%, National Life Insurance Company shares rose 2.7%, Paramount Insurance Company 2.6%, and Reckitt Benckiser was up 2.5%.

ICB Employees Provident MF 1: Scheme 1 turned out the worst loser with its price dropping by 4.6%. It was followed by Asian Tiger Sandhani Life Growth Fund down 2.9%, Dacca Dyeing was down 2.6%, Sunlife Insurance 2.3%, and National Tea Company was down 1.3%.

Meanwhile, the bourse in the port city of Chittagong also ended lower on Sunday.

The Chittagong Stock Exchange’s select indices, CSCX and CASPI, decreased by 1.9 and 3.4 points respectively, while shares worth Tk9.24 crore changed hands.