Stocks fly on Hasina’s fall

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Kamruzzaman Bablu :

The prime index of both stock markets in the country saw a significant rise on Tuesday, the first trading day after the end of dictator Sheikh Hasina’s regime. The Dhaka Stock Exchange (DSE) prime index climbed 3.77 percent, marking the biggest single-day gain in over 43 months.

Market analysts attributed the rise to spontaneous participation fueled by renewed optimism and excitement. Investors took positions in blue-chip stocks as political tension eased following Sheikh Hasina’s resignation on Monday.

Continuing this trend, the Dhaka bourse witnessed a magical day on Thursday, the day of the power transition to the interim government, driven by expectations of good governance in the capital market.

The DSEX registered a 5.44 percent spike, the highest jump in four and a half years. Over three days following the fall of the Sheikh Hasina-led Awami League government on August 5, the DSEX added 13 percent, or 695 points.
On Thursday, market turnover surged by 107.1 percent to a six-month high of Tk 1,606 crore, up from the previous session’s Tk 775 crore. Out of the 397 issues traded, 362 advanced, 26 declined, and nine remained unchanged at the DSE. The blue-chip index, DS30, and the Shariah-based index, DSES, closed at 2,132.73 and 1,274.91 points, respectively, with all large-cap sectors posting positive performances.

Both investors and the newly formed interim government see hopes and challenges in stabilizing the market. This optimism was reflected in the market’s performance on Thursday.

“This rally is a reflection of the investors’ upbeat mood,” said Mir Ariful Islam, managing director and CEO of Sandhani Asset Management Limited. “When there is a regime change, expectations run high that the new government will make structural changes for the benefit of the market.”

Nazrul Islam Mojumder, Managing Director of MTB Securities Limited, added, “Investors are hopeful, so they are entering the market with fresh funds. They were unhappy year after year seeing the ailing stocks. Now, they are happy to see the dynamism.”

He expressed optimism that the market would remain strong as the interim government includes economists advocating for financial sector reforms. “The reform is necessary and will send a good message to institutional and foreign investors,” he said.

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On Thursday, the block market saw shares worth Tk 20.5 crore transacted, representing a 1.28 percent turnover. The SME index, DSMEX, increased by 17.75 points, with a Tk 12.5 crore turnover, a 26 percent decrease from the previous session.

Investors were pleased as shares of financially sound companies rose, rather than those with poor prospects, indicating a reduced presence of manipulators. Institutional investors, who had been sidelined for years, are now injecting funds into stocks.

“Most share prices had reached their lowest due to the lack of investor confidence. So, the recent rise is not ensuring profits for many yet,” said Md Sajedul Islam, a former vice president of the DSE Brokers Association of Bangladesh. “Now, investors are coming to the market because they regained some confidence, and they think they will not incur losses due to manipulation.”

He emphasized that investor confidence is crucial for the market. “If investors have confidence and think there will be profit, funds will come to the market. This shows that the market only needs confidence. No other support is needed if confidence can be boosted.”

Investors are optimistic about the return of good governance in the market after Sheikh Hasina’s resignation, market experts said. The market rally was largely supported by fundamentally strong and blue-chip stocks.

On Tuesday, the blue-chip DS30 index jumped more than 48 points to 2070, while the DSES index rose 16 points to 1,235. Turnover, an important market indicator, stood at Tk 4.15 billion. Of the issues traded, 249 advanced, 112 declined, and 27 remained unchanged on the DSE trading floor.

Islami Bank stock soared 9.82 percent to Tk 35.8 per share on Tuesday as investors rushed to buy its shares, anticipating an ownership change after the fall of the Awami League-led government. Islami Bank is among the six companies with a floor price still in effect. The bank witnessed a significant change in its board and management in early 2017, as Armada Spinning, a concern of the business giant S Alam Group, took control of the bank “unlawfully.”

“The optimistic investors rushed to capitalize on oversold stocks as they had become cheap after sharp corrections in recent times,” said Akramul Alam, head of research at Royal Capital. He noted that investors were hopeful about the return of good governance in the market following the news of the formation of an interim government.

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