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US, Europe & Asia Bourses falls

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The stock market in Asia, Europe and the US fell. The global bourses have fallen mainly due to the increasing fears of a global economic slump.

Even though the stock markets of Asia, Europe and US fell, the stock markets of the UAE, Qatar, Jordan and Lebanon were hiked in the previous week. Aside, the stock markets of Kuwait, Saudi Arabia, Oman and Morocco points dropped.

UK’s FTSE 100 index lost 6.18 points last Friday and Germany’s blue chip index DAX lost 197.78 points. At the same time, France’s CAC 40 index fell by 69.48 points.

Additionally, the capital markets of Denmark, Poland, Germany, Greece, Finland, Switzerland, Spain, Italy, Netherlands, Belgium, Portugal, Austria, Sweden and Ireland have lost points. But then, points have been added in the capital markets of Norway, Hungary and Luxembourg at this time.

The Dow Jones Industrial Average fell 2.11pc or 630 points on the last day of the week. At the same time, the country’s S&P 500 index lost 2.80pc or 104.86 points and the Nasdaq index lost 3.80pc or 420.91 points.

In addition to the US, the capital markets of Argentina, Peru, Brazil, Mexico, Chile and Colombia in the region lost points. On the other hand, the Venezuelan capital market was good at this time.

Previous week Friday, in addition to the US and Europe, the capital markets of Asia also fell. The Nikkei 225 index of Japan, one of Asia’s leading capital markets, fell by 195.19 points on that day. India’s BSE Sensex index fell by 30.81, Vietnam’s Hang Seng index by 272.10 and China’s Shanghai Index by 16.81 points. In addition, the capital markets of Hong Kong, South Korea, Taiwan, Australia, New Zealand, Pakistan, Malaysia, Indonesia, Singapore, Thailand, Sri Lanka and the Philippines also lost points at this time.

 

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Dhaka Bourse Surge Amidst Sluggish Turnover

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Bourse dse indices turnover stock exchange

Dhaka Stock Exchange DSE, Bourse on the last working day of the week, 30th May, ended with a hike in Indices and Turnover from the previous working session. This information is known from DSE sources.

374 crore 48 lakh taka shares were traded on this day. 67 crore 80 lakh less tradings were done in DSE today compared to the previous workday, 29th May, Shares worth Tk 306 crores 67 lakh shares were traded last time, Wednesday

The benchmark DSEX increased 23.43 points or 5,251 The Shariah-based index DSES added 4.73 points or 1,143, and the blue-chip index DS30 increased by 4.90 points or 1,874.

Of the issues traded, 213 advanced, 126 declined and 50 remained unchanged.

Global Heavy Chemicals Limited ranked top gainer on DSE, the share price increased by Tk 2.80 paisa or 9.79 percent. On this day, the share was last traded at Tk 31.40 paisa.

Bata Shoe Limited ranked top loser on the DSE, the share price dropped by Tk 29.00 paisa or 2.99 percent. On this day, the share was last traded at Tk 939.90 paisa.

DSE topped on trade is Rupali Life Insurance Limited 12 crore 56 lakh takas of company shares have been traded.

A total of 38 companies’ shares were traded in the Block on Dhaka Stock Exchange. A total of 54 lakh 68 thousand 164 shares of the companies were traded. The financial value of which is 42 crore 80 lakh taka

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Asian markets extend losses with Wall St as rate hopes dim

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Asian Markets

Asian markets fell Thursday, with traders tracking losses on Wall Street fuelled by concerns over rising Treasury yields and fading hopes for US interest rate cuts.

The losses in equities extended a more than week-long sell-off that came on the back of forecast-beating data and warnings from Federal Reserve officials that they were in no rush to lower borrowing costs.

A second straight day of weak demand in a Treasuries auction forced yields — a proxy for interest rates — to extend a recent advance.

Traders are now focusing on the release Friday of the crucial personal consumption expenditures (PCE) index, the Fed’s preferred gauge of inflation, hoping for signs that prices are being brought under control enough to allow officials to ease monetary policy.

The central bank’s “Beige Book” survey of the world’s top economy suggested the outlook had become gloomier, with discretionary spending cooling and consumers more sensitive to costs in recent weeks.

It also said job gains were largely modest to negligible.

The report provided a little hope that the Fed’s tight policy stance was having some effect, though with inflation still stubbornly well above its two percent target, rate-cut hopes remain dimmed.

Still, Cantor Fitzgerald’s Eric Johnston said the latest spike in Treasury yields might not be entirely down to sticky prices.

“Bond yields may be moving higher mainly due to supply of bonds and the continued massive deficit — and not because of a concern around inflation or strong economy,” he said.

All three main indexes retreated in New York, with the Dow off more than one percent.

And Asia again followed the US lead.

Tokyo gave up more than one percent, while there were also losses in Hong Kong, Shanghai, Singapore, Seoul, Wellington, Taipei, Manila and Jakarta.

Sydney was in the red, with mining giant BHP giving back around 1.5 percent after giving up on its proposed $49-billion takeover of British rival Anglo American, which would have been one of the biggest in the industry and created a copper titan.

Hopes for a softening of the Fed’s monetary policy have been weighed by comments from a succession of decision-makers saying they wanted to see more data convincing them that inflation was on its way back to two percent.

The latest was Atlanta Fed chief Raphael Bostic, who saw a cut potentially coming at the end of the year, though many of the indicators he closely watched were moving in the right direction.

“My outlook is that if things go according to what I expect — inflation goes slowly, the labour market slowly and orderly moves back into a sort of a weaker stance, but a stable-growth stance,” he told a conference.

“I’m looking at the end of the year, the fourth quarter, as the time where we might actually think about and be prepared to reduce rates.”
– Key figures around 0230 GMT –

Tokyo – Nikkei 225: DOWN 1.5 percent at 37,974.47 (break)

Hong Kong – Hang Seng Index: DOWN 0.7 percent at 18,353.13

Shanghai – Composite: DOWN 0.1 percent at 3,108.62

Dollar/yen: DOWN at 157.36 from 157.70 yen on Wednesday

Euro/dollar: DOWN at $1.0797 from $1.0804

Pound/dollar: DOWN at $1.2694 from $1.2702

Euro/pound: UP at 85.07 from 85.03 pence

West Texas Intermediate: FLAT at $79.24 per barrel

Brent North Sea Crude: UP 0.1 percent at $83.68 per barrel

New York – Dow: DOWN 1.1 percent at 38,441.54 (close)

London – FTSE 100: DOWN 0.9 percent at 8,183.70 (close)

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IPO market should be strengthened: Shanta Equity CEO

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A dismal primary market could be viewed as a major reason behind the prolonged weakness of the secondary market, said investment banker Rubayet-E-Ferdous, CEO of Shanta Equity Ltd.

The primary market, through initial public offerings (IPOs), enables companies to raise capital and allows investors to participate in the growth potential of businesses.

“Scarcity of good scrips has become increasingly prominent as a problem for stock investors, especially large institutional funds, in Bangladesh,” he said in a recent interview with the news reporter. “Poor supply of good scrips discourages serious investors, ultimately deterring demand.”

For instance, he noted that in the last nine years since 2015, only 75 firms, including a handful of sizable ones like Walton, Robi, and Acme, have collectively raised a meagre total equity capital of Tk5,700 crore. In contrast, BRAC Bank alone disbursed more than Tk10,000 crore in loans in 2023, while Eastern Bank disbursed over Tk4,300 crore in the same year.

According to the investment banker with over two decades of experience, annual capital raised through IPOs in Bangladesh is even less than what some individual bank branches disburse as loans. This heavy reliance on bank loans for business expansion has become an increasing concern.

Despite Bangladesh’s economy being significantly smaller than India’s, Indian companies (excluding SMEs) raised around 100 times more equity capital from their bourses. This listing activity attracted investors from both domestic and international markets, and the Indian stock market size rose to 130% of its GDP. In contrast, the total value of all listed companies on the Dhaka Stock Exchange (DSE) is still less than 10% of Bangladesh’s GDP, highlighting the severe underdevelopment of the country’s stock market.

The lack of enough good scrips has deterred large, especially institutional investors in Bangladesh, whereas the Indian market has a robust mutual fund industry that grew five times in a decade to $770 billion, engaging four crore investors. In Bangladesh, the struggling mutual fund industry affects market behaviour due to a severe lack of contrarian investors who help maintain market stability while generating wealth for investors over time.

Problems with the primary market in Bangladesh

“Entrepreneurs’ appetite for IPO capital has been lacking due to stringent rules regarding the pricing of primary shares and the usage of public money,” said Rubayet-E-Ferdous, who has led teams managing several large-cap IPOs in the past decade.

“The pricing method for primary shares is too inclined towards past performance and asset base, which does not adequately value asset-light companies with high growth potential.”

He also suggested that the structure for distributing primary shares among investor classes should be revised, with institutional investors – who are better at taking risks – receiving fewer shares compared to retail investors.

“On the other hand, retail investors often oversubscribe to IPOs, regardless of the firm’s quality, mainly focusing on short-term capital gains post-debut.”

Ferdous believes that entrepreneurs or firms should not be deprived of their expected share prices, only for the shares to later surge several times in the secondary market.

“Just as profitable state-owned companies, many successful multinational companies in Bangladesh are hesitant to go public, despite potential tax benefits. The government should prioritise efforts to encourage their listing on the stock market. If not through IPOs, direct listing of MNCs could significantly strengthen the stock market.”

“The government, despite sacrificing some revenue due to tax cuts for listed firms, should offer incentives for listing, as tax revenue from firms’ share trading could offset these costs,” Ferdous emphasised, noting that listed companies generally exhibit greater transparency in their accounting practices.

“We can initiate the journey towards a robust capital market by doubling the number of IPOs annually, both in terms of IPO numbers and the capital raised. At least Tk2,500 crore worth of IPOs should be conducted each year to attract new investors and revitalise existing ones,” he concluded.

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