The Dhaka Stock Exchange (DSE), Bangladesh’s primary equity market, experienced a sharp downturn in the week ending July 23. Key broad indices fell sharply, trading volume dried up, and market capitalization lost over Tk 9,500 crore amid a widespread decline in share prices.
The main benchmark index, the DSEX, plunged 96 points (1.63%) to close the week at 5,804 points.
Other major indices registered similar losses:
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DSE Shariah Index (DSES): Shed 24 points to end at 1,183 points.
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DS30 (Blue-Chip Index): Dropped 35 points to settle at 2,193 points.
Turnover and Market Capitalization Shrink
Trading activity slowed down noticeably as cautious investors pulled back:
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Total Weekly Turnover: Fell by 27.90% to Tk 5,316.33 crore, compared to the previous week.
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Average Daily Turnover: Stood at Tk 1,063.27 crore, down significantly from Tk 1,474.84 crore in the preceding week.
Due to broad-based price declines, total DSE market capitalization contracted from Tk 7,10,883 crore to Tk 7,01,271 crore. This represents a weekly erosion of Tk 9,632 crore (1.35%).
Weekly Market Breadth (392 Scrips Traded)
├── Advanced: 120
├── Declined: 240 (61.2%)
└── Unchanged: 26
‘P/B Ratio’ Panic Hits Insurance Stocks
Market analysts attributed the broader market weakness to investor unease surrounding the regulator’s newly proposed draft margin rules. The draft introduces the Price-to-Book (P/B) ratio as a benchmark criterion for determining margin loan eligibility for financial institutions, including insurance companies.
Under the proposed rules, insurance companies with a P/B ratio exceeding 1:1 would be excluded from margin financing facilities. Fearing a potential loss of margin eligibility and a subsequent liquidity crunch, panic selling swept through the insurance sector.
Out of the 58 listed insurance companies on the DSE, 52 saw their share prices decline sharply, dragging down overall market sentiment throughout the week.
