Bearish market: One-fourth issues below face value

The year-long depressed capital market trend sent at least one-fourth issues below their face value of Tk 10 in the Dhaka Stock Exchange.

According to DSE data, some 92 issues, including 35 mutual funds, are being traded below their face value now as poor performance sapped investors' appetite.

Market analysts said investors are not encouraged to invest in these issues due to their poor financial performance, lower return and bad reputations.

Many of the companies were shut for long and did not have any financial abilities to declare dividends.

Some 92 or one-fourth issues from 10 sectors have been trading at lower than their face value of Tk 10 as of March 25, the last trading day before the government-announced shutdown.

Of the ill-fated issues, even 31 were traded below Tk 5.0 each as of March 25 amid free-fall of stock prices in the past few months.

The DSE key index lost 1,522 points, wiping out market capitalisation of Tk 1,015 billion in the past 12 months since March 25 of last year.

A total of 358 issues, including 37 mutual funds, are listed on the Dhaka bourse now.

Of them, mutual funds are the highest in number, as 35 closed-end mutual funds out of 37 have been trading below their face value, the DSE data shows.

Textile sector followed next as 24 textile & garment companies, out of 56 are being traded below their face value.

It was followed by non-bank financial institutions as 11 issues, out of 23 from the sector have been trading below their face value.

From the heavyweight banking sector, eight banks, out of 30 have been trading below their face value, the DSE data shows.

The investors' confidence in financial institutions and textile sector were very low due to the huge bad loans in the banking sector and poor export growth in apparel sector, said an analyst.

Three companies each from engineering and pharma sectors have been trading below their face value.

Two issues each from ceramic, food & allied, miscellaneous and travel & leisure sectors have been trading below their face value.

A mutual fund is an investment fund that gathers capital from a number of investors to create a pool of money that is then re-invested into stocks, bonds and other assets.

Investors, particularly individuals to the market might expect mutual funds are a comparatively less risky bet considering managed by professionals, said an analyst.

Unfortunately, it is not happened in Bangladesh over the years due to poor management, he said.

So, people are not encouraged to invest in these funds, he said adding that these funds are giving the others a bad name.

Eleven mutual funds which are trading below Tk 5.0 each as of March 25 are: First Janata Bank Mutual Fund, AB Bank First MF, EBL First MF, EBL NRB MF, Exim Bank First MF, First Bangladesh Fixed Income Fund, IFIC Bank First MF, PHP MF 1, Popular Life First MF, Trust bank First MF and Vanguard AML Rupali Bank Balanced Fund.

Another twenty companies are now trading below Tk 5.0 each.

The companies are United Airways, ICB Islamic Bank, Appollo Ispat Complex, Fareast Finance, FAS Finance, International Leasing & Financial Services, Peoples Leasing, Premier Leasing and Union Capital.

Beximco Synthetics, Keya Cosmetics, C&A Textile, Dhaka Dyeing, Delta Spinners, Familytex, Generation Next Fashion, RN Spinning Mills, Tallu Spinning, Tung Hai Knitting and Zahintex Industries are also trading below Tk 5.0 each.

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