Middle East tensions roil stocks

Stocks witnessed a sharp fall in the outgoing week after Eid holiday, as jittery investors fled risky assets, fearing that escalating Israel-Iran tensions will have a significant impact on the country's economy.

Apart from the potential global crisis, the rising interest rates in the country prompted investors to opt for fixed-income instruments, which are now more lucrative than the stock market returns, market analysts say.

Following a five-day break on the occasion of Eid-ul-Fitr, equities were rattled on the Dhaka Stock Exchange (DSE) floor throughout the week, and the market index tumbled below 5,700-mark for the first time in three years on Thursday.

Substantial price erosion of large-cap stocks dragged the benchmark DSEX index down by more than 177 points or 3.03 per cent to 5,687, the lowest in almost three years since early May in 2021.

"Stocks resumed its free-fall in the first week following the Eid vacation as investor sentiment noticeably dampened by the macroeconomic uncertainty stemming from the recent geopolitical crisis," said EBL Securities.

Price fall of Beacon Pharma, National Bank, BAT Bangladesh, Square Pharma, Square Pharm, Brac Bank, LafargeHolcim, and Orion Pharma had largely contributed to the weekly market plunge as they jointly accounted for 47 points of fall in the key index.

The blue-chip DS30 index, a group of 30 prominent companies, lost 48 points to 1984 while the DSES Index, which represents Shariah-based companies, plunged 36 points to 1,246.

The growing deposit rates in the banking sector and the higher return against treasury bonds are prompting savers to move funds away to the money market from the stock market, said Md Sajedul Islam, managing director of Shyamol Equity Management.

"The market had been bearish for long while one issue after another dampened investors' confidence badly," said Mr Islam.

The jittery investors are rattled by the growing tensions over the Middle-East geopolitical crisis and its probable economic impacts that can potentially affect the market outlook, said EBL Securities.

The stockbroker noted that the market has been wading through a prolonged downbeat vibe, and such subdued market sentiment has yet to rebound until there are significant catalysts to counter the prevailing pessimism.

Turnover, a crucial indicator of the market, stood at Tk 19.12 billion this week.

Investors were mostly active in the pharmaceutical sector, capturing 18.6 per cent of the week's total turnover, followed by textile sector and food sectors.

Non-bank financial stocks saw the highest beating as the sector went down more than 7 per cent, driven by Fareast Finance that plunged more than 11 per cent. It was followed by ceramic, paper, general insurance, power and telecom sectors.

Most of the traded issues saw price erosion, as out of 395 issues traded, 285 declined while only 89 advanced and 21 remained unchanged during the week.

Newly listed Asiatic Laboratories dominated the turnover chart, with shares worth Tk 936 million changing hands, followed by Lovello ice-cream, Alif Industries, Best Holdings, and Fu-Wang Ceramic.

Asiatic Laboratories was also the week's top gainer, posting a 17.3 per cent increase while National Bank was the worst loser, shedding 13 per cent.

The Chittagong Stock Exchange also saw a massive fall, with its All Shares Price Index (CASPI) losing 489 points to close at 16,244 and the Selective Categories Index (CSCX) shedding 293 points to finish at 9,767.

Of the issues traded, 211 declined, 61 advanced and 29 others remained unchanged on the CSE.

The port city bourse traded 13.69 million shares and mutual fund units with turnover value of Tk 486 million.

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