DSE stocks tumble as investors jittery over SEC actions

FE Report

The benchmark index of the Dhaka Stock Exchange (DSE) sank to one-month low with the daily turnover suffering heavily Monday, as anxiety seized investors due to the securities regulator's frequent interferences, experts said.

The market opened on a negative note and fell almost continuously right until the end of trading. All the major sectors including financials, mutual funds, telecommunication, real estate and energy, except IT, closed down.

The benchmark DSE General Index (DGEN) tumbled 116.15 points or 2.07 per cent -- the biggest single-day fall since February 28 -- to close at 5,486.43, which was the lowest since February 7.

The broader DSE All Shares Price Index (DSI) shed 90.25 points or 1.96 per cent to close at 4,493.41, while the DSE-20 blue chip index dropped 24.96 points or 0.83 per cent to 2,976.73.

"Regular interference unnerved the investors, causing the market to tumble," said Akter H Sannamat, Managing Director of Prime Finance and Investment Limited.

The market is gripped by the fever of the upcoming DSE polls, casting a negative impact on trading too, a source said.

On Sunday, the Securities and Exchange Commission (SEC) moved to probe attempts at jacking up the share price of Golden Son Limited by spreading rumour through a specific mobile phone number.

The regulator also summoned a merchant bank and one of its clients to explain their roles in the recent unusual share price hike of the Indian soap maker Marico.

Marico dropped 4.03 per cent and Golden Son 3.37 per cent.

The daily turnover suffered a big jolt as it fell 22 per cent to Tk 7.46 billion, the lowest since December 24.

Tightening credit facilities by the SEC also sent the investors' purchasing capacity into the red due to continued price erosion, said stockbrokers.

Early last month, the SEC reduced the loan margin ratios for the brokers and merchant bankers to cool down the market.

"Money is siphoning off the market. That's something we have to look at, because it sends out negative signals," said Sannamat.

Trading of AIMS 1st Mutual Fund resumed after the SEC rejected the fund's dividend declaration.

The fund hit the lower limit of its circuit breaker, losing 19.99 per cent and there were no buyers of the fund compared to the millions of sellers at the other end. Of the other mutual funds, eight lost more than 5.0 per cent each.

The telecommunication sector declined 4.06 per cent, energy 1.26 per cent, general insurers 2.10 per cent, leasing 1.99 per cent, tannery 1.21 per cent, pharmaceuticals 0.87 per cent, banks 0.64 per cent, cement 0.23 per cent and life insurers 0.37 per cent.