Market capitalization shrinks by Tk65,400cr in 9 months

23 Oct 2019 10:51 AM
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The market capitalization at Dhaka Stock Exchange (DSE), the country’s premier bourse, has dropped by 15.51% or Tk65,411 crore in the last nine months of this year. 

As of on Tuesday, DSE market cap declined to Tk3,56,170 crore from  Tk4,21,581 crore on January 29.

Market capitalization, or market cap, is calculated by multiplying the total number of a company's outstanding shares with the current market price of shares. 

Market operators observe that share price loss of large cap companies affected the overall market-cap at DSE.

According to the monthly review of DSE, the market capitalisation to GDP ratio on the DSE also fell by 13.06% as of September which was  15.06% in January this year. 

The ratio was at its peak at 50.67% in 2010 and came down to 33.23% within a year after the biggest market crash in the country’s history in 2010-11.

Stock market analyst and honorary professor at Dhaka University’s economics department Abu Ahmed told Dhaka Tribune that the market cap to GDP was related with the index. The ratio fell as the index declined sharply, he noted.

Market operators said three large cap companies Grameenphone, British American Tobacco Bangladesh (BATBC) and Brac Bank mostly led the fall in capitalisation in the last couple of months. 

They said GP led the fall of index as investors remained cautious about the ongoing dispute over audit claim between GP and the telecom regulator.

“The Grameenphone’s loss of market capitalisation affected the overall market cap at DSE as the mobile operator was the highest market-capitalised company at the stock exchange,” Abu Ahmed said.

The share prices of GP began to sink sharply after April 22 when the company had declared profit fall by 2.46% for the first quarter compared with that in the same period of the previous year. 

The share price of GP was Tk391 on January 1. It closed on Tuesday at Tk321 per share. The market cap of the company declined to Tk42,588 crore in DSE.

BATBC and Brac Bank share prices plunged as the listed firms reported lower earnings in the last two quarters.

The share price of the BATBC was Tk3,451 on January 1 this year.  The share price was Tk1,368 on June 30 and on Tuesday it closed at 

Tk1,067. The market cap of the company shrunk to Tk19,747 crore.

The Brac Bank share price was Tk83 on January 1 in this year, it closed  on Tuesday at Tk57 per share. The market cap of the company fell to Tk7,215 crore in DSE.

Market scenario on Tuesday :

Stocks witnessed sharp decline on Tuesday as sell-off continued. The key index of DSE, DSEX closed at 4,708.7 points yesterday after losing -1.11% or 52 points during the session.  It was the lowest level of DSEX since November 17, 2016. 

The prime index lost 1,242 points from its highest hit of 5,950 points, since January 24 this year.

Taking to Dhaka Tribune, market analysts and insiders said the DSEX, the benchmark index of DSE, lost 73 points in the last two sessions (Tuesday and Monday) amid investors’ shaky confidence. 

The investors’ selling appetite was observed from the beginning of the session and continued till closure.

Market closed negative riding on large cap scrips -- BATBC, Brac Bank and Berger Paints Bangladesh -- as investors exerted sell pressure throughout the session, showed the daily market analysis of UCB Capital Management Limited.

On Tuesday, among major sectors, only telecoms closed positive. Engineering sector faced major correction and dominated the turnover chart.

Participation in the Dhaka bourse stood at Tk288.4 crore, which was Tk350.5 crore in the previous session. 

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

The engineering sector contributed 15.1% of the total turnover while pharmaceuticals, insurance and banking sectors contributed 14.9%, 13.8% and 12% respectively.