Stocks fall as BB tightens oversight of NBFIs

Shares in Dhaka fell last week after gaining the previous week as investors opted to sell shares following a decision by the Bangladesh Bank to tighten supervision of investments by non-banking financial institutions on the stock market.

DSEX, the main index of the Dhaka Stock Exchange, fell 1.33%, or 94.6 points, over the past week to close at 6,991.36 points on February 17, the last trading session of the week, after gaining 62.43 points the previous week. .

Shares fell in most sessions of the five-day week as investors remained puzzled by the current market volatility, market operators said.

They said the central bank’s latest circular on capital market exposure limit for non-bank financial institutions weighed heavily on market sentiment as investors expected positive action from the bank. central.

In accordance with Circular BB, market prices of stocks, debentures, corporate bonds, mutual fund shares and other capital market instruments held by NBFIs would be considered their capital markets investments.

Loans made by NBFIs to their subsidiaries for direct or indirect stock market investments will also be considered as their stock market investments, he said.

In addition, the central bank has requested information and opinions from the Bangladesh Securities and Exchange Commission on the use of a total of Tk 1,765 crore in loans issued by seven NBFIs to NBFI-associated brokerages.

The BB move shocked investors, causing them a huge loss in the final trading session of the week.

EBL Securities, in its weekly market commentary, said: “Recent market volatility has weakened investor confidence and they have preferred to either take a wait-and-see approach or opt to sell their holdings to avoid further losses.” .

“Bangladesh Bank issued a circular last week clarifying which components would be considered as NBFI investments in the capital market,” he said.

As a result, average stock prices in the non-banking financial institutions sector fell 4.8% over the week.

In addition, average stock prices in the general insurance, energy and banking sectors fell 6.6%, 2% and 1.1% respectively.

Of 388 issues traded, 87 advanced, 280 declined and 19 remained unchanged.

DS30, made up of 30 large-cap companies, fell 23.64 points to end at 2,573.85 points and the DSE Shariah index, DSES, lost 9.47 points to close at 1,508.14 points.

Average daily turnover, a crucial indicator of investor participation, fell by 9.83% to Taka 1,193.42 crore during the week from Taka 1,323.55 crore the previous week. .

Apex Foods Limited was the best performer of the week, posting a gain of 30.34%, while Union Insurance Company Limited was the worst loser, losing 16.49%.

Fortune Shoes Limited topped the turnover list with its shares worth Tk 431.66 crore changing hands.

BEXIMCO, Orion Pharma, Bangladesh Shipping Corporation, SAIF Powertec, Rahima Food Corporation, Yeakin Polymer, Sonali Paper and Board Mills, National Life Insurance Company and Anwar Galvanizing Limited were other revenue leaders.

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