Regulator’s move lifts stocks for 3rd day

Shares on the Dhaka Stock Exchange rose for the third consecutive day yesterday thanks to a regulatory move that aims at raising the participation of institutional investors in the market in order to reduce the volatility caused by the majority retail investors.

The DSEX, the benchmark index of the premier bourse in Bangladesh, advanced 55 points, or 0.84 per cent, to close at 6,662. In the last three days, the index added 180 points.

The turnaround came after the Bangladesh Securities and Exchange Commission (BSEC) initiated a move recently to give a boost to the stake of institutional investors in the stock exchanges. It has officially asked them to increase their share.

At present, institutional investors account for 20 per cent of the market capitalisation. This means 80 per cent of the market is controlled by retail investors, a majority of whom are panic-driven.

In contrast, investors such as mutual funds, pension funds and insurance companies hold 41 per cent of global market capitalisation.

The DS30, the blue-chip index, and the DSES, the Shariah index, were up 14 points and 10 points, respectively.

Turnover on the DSE surged 24 per cent to Tk 754 crore from the previous day's Tk 605 crore.

Gainers outperformed losers 300 to 55, with 25 companies remaining unchanged.

Regulatory steps to increase the institutional fund flows supported the market strongly, said International Leasing Securities Ltd.

"The regulator urged the state-owned banks, brokers, dealers, merchant bankers and asset management companies to take initiatives to make fresh investments in the market. As a result, the investors got back their confidence," it said in its market analysis yesterday.

BDCOM Online topped the advancers' list with a gain of 9.73 per cent. IPDC Finance was up 7.3 per cent, NRB Commercial Bank rose 7.1 per cent, Mozaffar Hossain Spinning Mills added 6.83 per cent, and Eastern Lubricants edged up 6.25 per cent.

Premier Bank was the worst-performing stock on the day, dropping 13.58 per cent as there was no circuit breaker on its price on the day following its record date on April 20. 

Circuit breakers function automatically by stopping trading when the price of a stock hits predefined levels. But on the record date, the cut-off date established by a company to determine which shareholders are eligible to receive a dividend, a stock can move freely.

On the other hand, the rest of the stocks can go up by a maximum of 10 per cent and go down by a maximum of 5 per cent in a single day under the current circuit breaker.   

Prime Bank was down 4.98 per cent, ICB Islamic Bank slipped 4.17 per cent, Familytex BD decreased 4.08 per cent, and Bangladesh Industrial Finance fell 4.05 per cent.

Beximco Ltd was the most-traded stock with its shares worth Tk 52 crore changing hands. JMI Hospital, Bangladesh Shipping Corporation, IPDC Finance, and Sonali Paper also saw higher turnover.

The Chittagong Stock Exchange also rose. The CASPI, the main index of the bourse in the port city, closed the day at 19,593 after it rose 143 points or 0.73 per cent.

Of the 292 stocks witnessing transactions, 192 rose, 82 fell, and 18 did not see any price movement. Turnover stood at Tk 32.42 crore, slightly down from Tk 32.44 crore a day ago.