DSEX fares worse than peers

The Dhaka Stock Exchange (DSE)’s key index, DSEX, recorded a negative return of 5.4 per cent in the first five months of this year.

From January through May 2022, Bombay Stock Exchange’s key index, SENSEX, was negative 4.6 per cent and Karachi Stock Exchange’s KSE-100 fell 3.4 per cent, Vietnam’s VN-INDEX 13.7 per cent, and Sri Lankan CSEALL 33.7 per cent, according to the BRAC EPL Stock Brokerage Limited report.

Market analysts attributed investors’ worries over the country’s weak macro-economy and the global economic outlook to the recent stock market’s sharp downturn.

The market has been in the doldrums for around four months as investors grappled with various issues, including the ongoing Russia-Ukraine War, rising inflation, a record surge in the trade deficit, local currency depreciation against the US dollar, and concerns over the external debts of the country, according to them.

The stock market regulator continued taking steps one after another to halt the relentless fall in share prices, but the initiatives appeared to be ineffective to boost investors’ confidence in the current market, they said.

During the period, the return of Japan’s Nikkei 225 fell by 4.6 per cent in the Jan-May ’22 period, the S&P 500 of the USA fell by 13.3 per cent, and the 2.7 per cent positive index return of the UK FTSE100, said the BRAC EPL Stock Brokerage.

Brokers cited the widening trade deficit as the reason behind the plunge, saying it will keep taka under pressure further. The downturn in the market may be treated as an opportunity, they said.

If the economy goes bad, it will have some effect on the stock market, analysts say. The DSEX lost 460 points so far this year and closed at 6,433 on Wednesday—the highest level since May 16.

The key index of the Dhaka bourse rose by 25.08 per cent to close at 6,756.65 points on December 30, 2021 after gaining 950 points in the previous year. The DSEX hit a record high of 7,367 points on October 10, 2021.

DSEX closed in 2020 at 5,402 points despite being in a free fall between January and March as investors all over the world panicked as the novel coronavirus from Wuhan, China was putting down its roots everywhere.

Earlier, the key index gained 21.3 per cent, the highest among its peers, despite the 66-day recess for the countrywide general shutdown to slow the spread of coronavirus.

This was quite the turnaround for DSEX, which fell 17.3 per cent in 2019 while bourses in emerging Asian countries registered growth. At one point, the index was the lowest since January 2013.