Stocks fall further despite new circuit breaker

Investors were apparently dismayed with a recent circuit breaker recalibration by the Bangladesh Securities and Exchange Commission (BSEC), which was exemplified by the stocks continuing on a downward spiral to a three-year low yesterday.

The DSEX, the benchmark index of Dhaka Stock Exchange (DSE), plunged 60 points, or 1 percent to 5,518.

The index has fallen on all but one of the last nine days.

The BSEC issued an order on Wednesday, saying that stocks of listed companies would not be allowed to fall more than 3 percent based on the previous day's closing price.

Earlier it was 10 percent.

However, the upper limit, meaning the extent to which the price of a stock can rise, has been kept unchanged at 10 percent.

At the beginning of the day, the index dropped around 100 points yesterday.

Later it rose due to purchases by some large investors, which stock brokers said was prompted through verbal orders of the BSEC officials.

Meanwhile, the DSES, the index that represents Shariah-based companies, declined 12 points, or 1 percent, to 1,217.

Similarly, the DS30, which comprises blue-chip stocks of a group of 30 renowned companies, decreased 10 points, or 0.51 percent, to 1,974.

A stock broker said the BSEC's intervention created more panic as people were apprehensive over whether their funds would stay stuck, as had been after the launch of the floor price.

The floor price is the lowest price at which a share can be sold.

The BSEC set the floor price of every stock at the end of July 2022 to halt the free fall of the market indices amid global economic uncertainties.

It was determined based on the average of the closing prices on July 28 of the year and the preceding four days.

At present it remains in effect only for five companies.

The broker added that investors tried to sell shares to avail cash funds to invest in other sectors, such as treasury bonds, and keep in banks as the yields rates were pretty high.

"Who will take the risk of keeping fund in a bear run?" he explained, adding that this hastened the fall of the market.

At the DSE, 129 stocks dropped close to 3 percent while 392 were traded in total, indicating that investors tried to sell as much of those shares as possible.

Turnover, an indicator of the stock market, dropped 15 percent to Tk 511 crore.