Dhaka stocks dropped last week, extending its bear run for the second consecutive week, amid decreased participation of investors, market operators said.
The general index of Dhaka Stock Exchange lost 65.09 points, or 2.36 per cent, in the week closing at 2,695.58 on Thursday, while its blue chips index, DSE20, shed 71.86 points, or 3.16 per cent, to finish at 2,199.34.
A merchant bank official said the market witnessed a selling pressure from investors, especially from retailers, who—dejected by the recent prevalence of dullness at the market—scurried to sell off their holdings. He, however, said some investors also offloaded shares to gather cash to buy initial public offerings of Bay Leasing and Investment Ltd, subscription of which starts today.
Before the recent bear run, the market had been in a bull run for a couple of weeks thanks to an increased participation of investors after a two-and-a-half-month lull.
A DSE stockbroker said the price movement at the market fluctuated almost every day in the week, reflecting the investors’ shakiness about the market trend. The market also saw volatility in the share prices of a number of low-profile ‘Z’ category issues following various rumours and speculations, he said.
Out of the 295 issues, 104 advanced, 158 declined, two remained unchanged, and 31 were not traded in the week.
The DSE market capitalisation stood at Tk 1,02,467 crore on Thursday, 1.79 per cent down from the previous week’s closing at Tk 1,04,339 crore.
The DSE daily average turnover went down by 15.50 per cent to Tk 344.26 crore from the previous week’s Tk 407.39 crore.
Titas Gas topped the turnover leaders with a total transaction of Tk 176 crore, which accounts for 10.22 per cent of the week’s total turnover of Tk 1,721 crore at the bourse.
Shinepukur Ceramics, Beximco, Summit Power, Beximco Pharmaceuticals, Grameen Two Mutual Fund, Aims 1st Mutual Fund, ACI Formulations, Summit Alliance Port, and Keya Cosmetics are the rest of the week’s top 10 turnover leaders.
Al-Haj Textile is the week’s biggest gainer with a 61.69 per cent rise in its share price, with Lexco being the worst loser with a 19.74 per cent fall.
Of the total turnover of the week, ‘A’ category issues account for 64.60 per cent, ‘B’ category 2.12 per cent, ‘N’ category 29.41 per cent, and ‘Z’ category 3.87 per cent.
Sunday, January 18, 2009
Trade tops bank loan
The sectoral distribution of bank credit has marked a significant change, with a majority share going for trade financing, central bank data show.
Some 35.4 percent of total bank credit was meant for the trade financing as of September 2008, which was only 18.7 percent in March.
Up to September, the bank advances for industrial purposes reached 21.1 percent from 27.2 percent six months ago.
Senior bankers blamed the commodity price hike and subsequently a rush in opening of letters of credit (LC) for the trade financing. Some mid level private bank officials think that trade financing has increased because the banks are encouraged to do such financing on the plea that higher and faster repayment is ensured.
“A considerable number of LC was opened during the July-September quarter of 2008 on a speculative further rise in the commodity prices in international market,” said Mahmud Sattar, managing director of The City Bank.
Prices of commodities, including rice, wheat, edible oil and petroleum products all were in the peak till the third quarter of 2008. Prices of some of these products quadrupled in a year.
Sattar, also president of the Association of Bankers Bangladesh (ABB), a forum for bank chief executives, predicted a fall in the credit for trade sector in October-December period because of a price-drop.
BB data show domestic credit increased by Tk 17,412.9 crore or 7.0 percent during July-October 2008 as against Tk 10,007.7 crore or 4.87 percent during the same period a year earlier.
On the other hand, private sector credit grew by Tk10, 370.5 crore or 5.45 percent during July-October 2008 compared to a Tk 8,593 crore or 5.65 percent rise in the same period a year earlier.
Only 21.1 percent of total bank advances were for industry, 35.4 percent for trade, 2.3 percent for transport and communication, 16.0 percent for working capital, 6.8 percent for agriculture and 18.4 percent for other purposes.
As per BB data on bank advances up to March 2008, 27.2 percent was industrial, 24.7 percent working capital and 18.7 percent for trade on year-on-year basis.
“Credit to trade sector generates a handsome income from different commission and charges,” a mid level official of a private bank said.
On the declining trend in industrial financing, the ABB president said there was no big investment proposal in 2008.
Mahmud Sattar also differed with the central bank on the so-called 'unproductive sector'.
“I don't believe there is any unproductive sector,” he categorically said. Consumer credit generates power for consumption of people, he added.
Friday, January 9, 2009
Cash-strapped banks borrow Tk 5000 crore
The commercial banks on Wednesday borrowed Tk 5,000 crore from the central bank through Repo (repurchase agreement) and the call money market to meet their increasing liquidity crisis, banking sources said.
The Bangladesh Bank has injected Tk 3,000 crore in the banking sector at 8.7 per cent interest while the banks have borrowed Tk 2,000 crore at eight to 13 per cent interest from the call money market to counteract their liquidity crisis.
‘Banks are facing liquidity crisis as the money which went out of them in the run up to the national polls has not returned yet,’ said a senior official of the BB.
The official also said the banks’ demand for liquidity might be over after the January 22 upazila elections.
Besides, at least nine private commercial banks have already increased their interest rates on deposit by 0.50 to 1.50 per cent to collect more funds from their clients to meet their liquidity crunch.
On another front, local importers are reluctant to import commodities like rice, pulse, onion, and edible oil, resulting in a decline in letter of credit settlements, meaning fund inflow.
The LC settlement growth for import reduced by 30 per cent in December 2008 compared to same month in 2007. The growth posted a 19.14 per cent increase in July 2008 from that in July 2007.
According to banking sources, due to the global financial meltdown, local commercial banks have diverted their deposits from western banks to Asian ones, which also added to the cash crisis by fetching lower incomes.
Agrani Bank Limited chief executive officer Syed Abu Nasir Bukhtear Ahmed told New Age the demand for liquidity of commercial banks had increased day by day, but it was not a liquidity crisis.
He, rather, argued that the reducing call money and deposit rates meant the banks had surplus liquidity.
Bangladesh Institution of Development Studies research director Zaid Bahkt said the liquidity crisis in the banking sector would stabilise after the upazila elections, as most of the money invested for polls camp
The Bangladesh Bank has injected Tk 3,000 crore in the banking sector at 8.7 per cent interest while the banks have borrowed Tk 2,000 crore at eight to 13 per cent interest from the call money market to counteract their liquidity crisis.
‘Banks are facing liquidity crisis as the money which went out of them in the run up to the national polls has not returned yet,’ said a senior official of the BB.
The official also said the banks’ demand for liquidity might be over after the January 22 upazila elections.
Besides, at least nine private commercial banks have already increased their interest rates on deposit by 0.50 to 1.50 per cent to collect more funds from their clients to meet their liquidity crunch.
On another front, local importers are reluctant to import commodities like rice, pulse, onion, and edible oil, resulting in a decline in letter of credit settlements, meaning fund inflow.
The LC settlement growth for import reduced by 30 per cent in December 2008 compared to same month in 2007. The growth posted a 19.14 per cent increase in July 2008 from that in July 2007.
According to banking sources, due to the global financial meltdown, local commercial banks have diverted their deposits from western banks to Asian ones, which also added to the cash crisis by fetching lower incomes.
Agrani Bank Limited chief executive officer Syed Abu Nasir Bukhtear Ahmed told New Age the demand for liquidity of commercial banks had increased day by day, but it was not a liquidity crisis.
He, rather, argued that the reducing call money and deposit rates meant the banks had surplus liquidity.
Bangladesh Institution of Development Studies research director Zaid Bahkt said the liquidity crisis in the banking sector would stabilise after the upazila elections, as most of the money invested for polls camp
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