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Lack of financial education among traders lead to market volatility: LankaBangla Survey

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The current market volatility is due to a generally low level of financial education among traders, herd instinct, and poor certification requirements for trading eligibility, according to 88% respondents in a recent sentiment survey.

The Bangladesh Capital Market Sentiment Survey 2024 by the top-tier brokerage firm LankaBangla Securities also found the impact of financial projections through equity research publications, where the majority believes it will improve investment decision-making in the market under strict supervision of the regulator.

The flagship annual survey at its 12th continuation had over a hundred participants from various backgrounds, including investment bankers, managing directors, chief executive officers (CEOs), brokerage executives, service holders, retail investors, businessmen and students.

According to the survey, 37% of respondents perceived the capital market’s performance in 2023 as bad, with factors such as floor price, declining investor confidence, and fear of manipulation contributing to this sentiment. Some blamed the lack of regulatory reforms, the taka’s depreciation and the liquidity crisis for the situation. However, 5% said 2023 was very good.

A weak regulatory framework and lack of confidence would pose the biggest risks in 2024, followed by high-interest rates, a lack of good stocks, increased foreign sell-off, decreased liquidity flow, and interventions through frequent policy changes by different regulatory stakeholders, survey respondents anticipated.

While determining the biggest risks to the Bangladesh economy in 2024, the respondents ranked inflation and the crisis in the banking sector higher than global economic conditions, the war in Ukraine, weak exports, low remittances, energy crisis, and currency depreciation. Nearly half of the respondents categorically asked for more supportive policies by the central bank.

Over 56% believed inflation will increase in 2024, while 50% fear that local currency will depreciate further.

Respondents also offered suggestions for economic improvement, including export diversification, trade treaties, rational tax structures, tax authority reform, and the use of technology to detect tax evasion. However, they cautioned regarding higher interest rates, slower private credit growth, current account deficit, and weaker credit rating.

The survey said majority respondents feel brokerage professionals are not qualified enough to recommend stocks to buy and sell, and equity research reports by analysts help make better investments.

Two-thirds of respondents expressed dissatisfaction with the level of corporate governance, and nearly one-third considered it average in Bangladesh. Fifty-eight percent of respondents agreed that the Bangladesh Securities and Exchange Commission faces capacity constraints.

According to the survey, at the end of 2024, the stock market may remain moderately bullish, except for a majority. Gold and equity are being perceived as the most lucrative asset classes, where investors are looking most for pharmaceuticals, IT, insurance, food and allied and bank stocks.

However, questions regarding how much of the existing capacity the regulator is using in the interest of a higher integrity market were not a part of the survey.

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Bearish Trend on DSE

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Dhaka Stock Market DSE, Bourse on the last working day of the week, 18th July, ended with a drop in Indices and Turnover from the previous working session. This information is known from DSE sources.

391 crore 52 lakh taka shares were traded on this day. 192 crore 89 lakh less tradings were done in DSE today compared to the previous workday, July 16th, Shares worth Tk 662 crores 24 lakh shares were traded last time, Tuesday.

The benchmark DSEX decreased 36.64 points or 5,446 The Shariah-based index DSES dropped 10.43 points or 1,191 and the blue-chip index DS30 lost by 8.10 points or 1,953.

Of the issues traded, 38 advanced, 311 declined and 46 remained unchanged.

Techno Drugs Limited ranked top gainer on DSE, the share price increased by Tk 3.10 paisa or 9.72 percent. On this day, the share was last traded at Tk 35.00 paisa.

BD Thai Aluminium Limited ranked top loser on the DSE, the share price dropped by Tk 0.60 paisa or 3.00 percent. On this day, the share was last traded at Tk 19.40 paisa.

DSE topped on trade is Sea Pearl Beach Resort & Spa Limited 15 crore 86 lakh takas of company shares have been traded.

A total of 31 companies’ shares were traded in the Block on Dhaka Stock Exchange. A total of 1 crore 6 lakh 61 thousand 203 shares of the companies were traded. The financial value of which is 31 crore 82 lakh taka

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Asian markets drop with Wall St as Biden sparks fresh chip fears

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Asian markets sank with Wall Street on Thursday after a warning from the White House that it would target firms supplying China with key semiconductor technology, and Donald Trump’s comments on crucial chip supplier Taiwan.

The dollar remained subdued following its latest retreat caused by growing expectations that the Federal Reserve will cut interest rates at least once this year.

Firms linked to artificial intelligence have led a surge in equities this year as investors see the sector as the next major growth area, with market darling Nvidia piling on more than 140 percent since the start of the year.

The industry has helped push the S&P 500 and Nasdaq to multiple records in the past seven months, helped by the prospect of lower borrowing costs.

But the rally took a blow Wednesday when Bloomberg News reported that Joe Biden was looking at imposing strict curbs on firms such as Tokyo Electron and ASML if they continue allowing Beijing access to their chip tech.

The report, which comes as he looks to buttress his credentials as strong on China ahead of November’s presidential election against Trump, sent shivers across trading floors, sending the Philadelphia Semiconductor Index plunging nearly seven percent — its heaviest loss since 2020.

Nvidia dived more than six percent and Dutch firm ASML collapsed more than 12 percent.

Tokyo Electron fell 7.5 percent on Wednesday and a further 9.5 percent Thursday. TSMC shed more than three percent in Taipei.

Meanwhile, Trump’s comments that Taiwan — home of the key chip-maker TSMC and other major producers — should pay the US for its defence caused some geopolitical unease.

The fear fuelled a sell-off across Asian equities, with Tokyo and Taipei down at least two percent, while there were also hefty losses in Hong Kong, Shanghai, Sydney, Seoul, Singapore and Manila.

Analysts warned that the imposition of more chip restrictions could fuel further selling and lead to a correction in markets, which some warn have become overbought.

– ‘A big currency problem’ –

Worries over tech have offset the feel-good mood that has been sparked by recent data and comments from Fed officials indicating they are ready to cut interest rates as soon as September, and possibly again before January.

The latest boost for doves came in the central bank’s Beige Book summary of the economy, which said there were signs it was slowing.

“Expectations for the future of the economy were for slower growth over the next six months due to uncertainty around the upcoming election, domestic policy, geopolitical conflict, and inflation,” the report said.

The prospect of lower rates has weighed on the dollar, while the yen — which has been battered against the greenback this year — has won support from bets on a Bank of Japan hike in coming months.

“Markets are pricing in the Fed to start cutting rates in September, and risks of yen carry trade — the practice of borrowing low yielding currencies to invest in high yielding currencies — unwinding are building as yield gap narrows,” Saxo researchers said in a note.

“Recent comments from Trump have also hinted at concerns from US dollar strength.”

Trump, in Milwaukee for the Republican National Convention, has also weighed in on the dollar’s relative strength against the yen and yuan, telling Bloomberg Businessweek “we have a big currency problem” and “I would always notice they fought very hard to keep their currency low”.

Taylor Nugent, at National Australia Bank, said: “The comments play to the view (that) bilateral trade deficits and currency valuations are a key focus, and tariffs would be a key negotiating tool.”

Investors are keeping tabs on Beijing, where China’s leaders are expected to wrap up a key gathering, with hopes President Xi Jinping will unveil fresh measures to boost the world’s number two economy.

– Key figures around 0300 GMT –

Tokyo – Nikkei 225: DOWN 2.0 percent at 40,277.86 (break)

Hong Kong – Hang Seng Index: DOWN 0.5 percent at 17,652.42

Shanghai – Composite: DOWN 0.6 percent at 2,944.67

Pound/dollar: DOWN at $1.3007 from $1.3012 on Wednesday

Euro/dollar: DOWN at $1.0938 from $1.0941

Dollar/yen: DOWN at 155.92 yen from 156.33 yen

Euro/pound: UP at 84.09 pence at 84.07 pence

West Texas Intermediate: UP 0.7 percent at $83.39 per barrel

Brent North Sea Crude: UP 0.5 percent at $85.49 per barrel

New York – Dow: UP 0.6 percent at 41,198.08 (close)

London – FTSE 100: UP 0.3 percent at 8,187.46 (close)

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LafargeHolcim reveals their Q2 Financials

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One of the listed companies, LafargeHolcim Bangladesh Limited discloses its financial reports for the second quarter, (April – June 24).

The company’s Consolidated earnings per share (EPS) Tk 1.14 paisa in Q2 of the current financial year (April – June 24). Consolidated EPS was Tk. 0.69 for January-June 2024 as against Tk. 1.47 for the same period last year. EPS  was Tk 0.80 paisa during the same period last year. Consolidated NAV per share was Tk. 16.60 as of June 30, 2024.

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