Stock market debacle continues
despite new funds
The top official of a brokerage house says foreign investors sold not only the stocks of Grameenphone but also those of other companies as they lacked confidence in the Bangladesh stock market. Grameenphone’s shares fell to Tk 354 yesterday from Tk 416 in the last two and a half months.
The market debacle continues over the recent weeks and months eroding investors’ confidence. Poor management and liquidity crisis hit the market in a situation that shows the government has no coherent policy to sustain the market while dishonest players were found manipulating trading to make illegal fortune.
The central bank move last week to pump Tk 856 crore to the stocks to overcome liquidity crisis lending it through Investment Corporation of Bangladesh (ICB) to merchant banks to boost trading has failed to reverse the course.
The market reacted sharply on the first day of the week and then the euphoria disappeared on the second day. Meanwhile net foreign investment at Dhaka Stock Exchange sharply fell in the last two months owing to a government move asking Grameenphoneto pay huge taxes along with a number of restrictions on the company.
Continued depreciation of local currency in term of dollar also caused growing fear to foreign investors of further depreciation that may cause them to lose value of their investment. Investment from foreign investors hit Tk 154 crore in the negative zone in April after they bought shares amounting to Tk 257 crore and sold issues worth Tk 411 crore.
The net foreign investment was Tk 123 crore in the negative in March.The move from Bangladesh Telecommunication Regulatory Commission (BTRC) against Grameenphone, the largest stock in the DSE with a market capitalisation of Tk 48,529 crore, has spooked foreign investors, said a top official of a brokerage house involved in dealing with foreign investment.
The commission declared Grameenphone as the operator with Significant Market Power (SMP) in an attempt to enhance competition in the industry. On this ground, the regulator has already taken some decisions that will squeeze the business of the mobile phone operator.
The BTRC’s decision came in February and the foreign investors’ investment has been declining since March.This was not the first time regulators’ sudden moves against listed companies have hurt stocks.
For example, Bangladesh Energy Regulatory Commission (BERC) cut the distribution charge for TitasGas in 2015. As a result, the utility company lost more than Tk 3,000 crore in market value over a period of five months.
“Any sudden decision hampers investors’ decision,” said the brokerage house official, adding that there was a lack of coordination among all regulators.CEO of another brokerage house blames depreciation of the local currency which led foreign investors to sell shares in order to book profits.
On Tuesday last, US$ sold for Tk 84.50, up from Tk 82.98 on the same day a year ago, Bangladesh Bank data showed.Foreign investors apprehend a further depreciation of the taka as the central bank was artificially preventing the devaluation of the currency.