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Small-cap stocks dominate gainers’ chart in 2023, heavyweights at floor prices

Staff Correspondent
30 Dec 2023 21:43:47 | Update: 30 Dec 2023 21:43:47
Small-cap stocks dominate gainers’ chart in 2023, heavyweights at floor prices

Small-cap companies’ stocks dominated the gainers' chart while top large-cap stocks virtually yielded no returns on the Dhaka Stock Exchange (DSE) in 2023, an indication that investors believe they have hit their potential.

The share of Khan Brothers PP Woven Bag Industries Ltd soared over 600 per cent even though the low-performing company has been incurring losses. An auditor has found that its assets are missing.

The company’s stocks skyrocketed from Tk 9.9 to Tk 103.02 on the trading board of the Dhaka Stock Exchange (DSE), the highest rise among all shares in 2023.

Not only Khan Brother PP Woven Bag Industries, but another low-performing company’s stock was on the list of top ten gainers this year.

Khan Brother PP Woven Bag Industries was the top gainer with a 676 per cent surge, followed by newly listed company Trust Islami Life Insurance 451 per cent, Khulna Printing 236 per cent, RN Spinning Mills 161 per cent, Fine Foods 124 per cent, Crystal Insurance 114 per cent, Emerald Oil 113 per cent, Shyampur Sugar Mills 106 per cent, Deshbandhu Polymer 104 per cent and Prime Finance First Mutual Fund 102 per cent.

On the other hand, the travel and leisure sector suffered a 25 per cent decline, the highest in market capitalisation this year, led by sector-heavyweight Sea Pearl Beach Resorts. The company emerged as the worst performer as a single issue during this year. Its stock saw a 46 per cent decline.

“After all the capital market of Bangladesh navigated through a gloomy landscape in 2023, owing to internal constraints and challenging external factors,” said EBL Securities in the Market Review-2023.

However, the top market capitalisation companies of the Dhaka Stock Exchange in the year, though their return was much lower as they were stuck at their floor prices.

A company’s market capitalisation is calculated by multiplying the total number of outstanding shares with the current market price of its shares.

Almost all remained stuck at the floor price despite lucrative price levels, market insiders said.

Analysts and stock market insiders said this is not a good sign for the country’s stock market. If the trend goes unabated, it would pose a threat to market stability.

During the period, many investors were seen rushing towards rumour-based junk stocks which helped many small-cap issues top the gainers board, they said.

According to the EBL Securities, a total of 114 issues advanced in 2023 while 130 stocks declined and 148 others remained unchanged.

The most-traded stocks of the year include Sea Pearl Beach Resort, Bangladesh Shipping Corporation, Genex Infosys, Gemini Sea Food, Rupali Life, Eastern Housing, Intraco, Orion Infusion and Aamra Network.

DSEX, the key index of the Dhaka Stock Exchange (DSE), ended at 6,246.49 points on Thursday, the last trading day of 2023, which was 6,206.81 points on the first trading day of the outgoing year.

This year the DSE’s average daily turnover fell by 39.83 per cent to Tk 578 crore. It was Tk 960 crore in the previous year.

The market capitalisation to GDP ratio declined to 17.59 per cent in the outgoing year, down from 19.14 per cent in 2022.

The overall price-earnings (P/E) ratio rose to 15.77 at the end of 2023.

Experts said foreign investment in the country’s premier bourse remained positive for only three months of the outgoing year as overseas investors faced several issues, including political uncertainties in the election year, depreciation of taka, against the US dollar and woes in the country’s banking sector.

They also said that the obstacles which prevented investors from entering the market must be addressed. In this case, a good company has to pay the premium according to their respective eligibilities.

Apart from a lack of confidence in the regulator, investors have been grappling with several issues, including rising non-performing loans and liquidity shortages in the financial sector.

Other reasons are sell-offs by foreign investors and investors' lack of confidence for a long because of disappointing data on major macroeconomic indicators.

The national election in Bangladesh is scheduled for January 7, 2024.

In 2023, stocks of fundamental and multinational companies (MNCs) disappointed investors as their capital gains remained poor, while shares of many small-cap firms continued to rise sharply on the Dhaka bourse, an indication that investors believe they have hit potential.