The bull in the stock market charged forward last week, surging by 590.87 points, marking a significant milestone. The DSEX index graph shot up sharply, with the DS30 and Shariah indices also rising by 231.88 and 109.53 points, respectively.
This leap in the indices appears to salute the “August Revolution” and extend a warm welcome to the interim government led by Dr. Yunus. Such trends are typical across global stock markets during transitions.
Last week, the BSEC’s “mirror room” was free of external influences, allowing trading activities to proceed without interference. This contributed to a smooth and natural progression of the stock market. Over three days of trading, the DSEX index climbed to 5924.81 points—an increase that, while significant, remains within normal parameters. By the end of the week, the market P/E ratio stood at 11.42, making it an attractive option for buyers.
A detailed analysis of last week’s trading on the DSE reveals that the rise in indices was largely driven by strong fundamental stocks, particularly in the banking sector and multinational companies. These sectors, along with several other companies, currently have low P/E ratios. If these shares reach their fair value, the DSEX index could surpass the 10,000-point mark.
The stock market management must remain market-friendly and deepen the market to introduce “hedging” instruments. With hedging in place, the P/E ratio could reach any height.
The bull run last week was predominantly fueled by fundamentally sound shares, as evident from the DSE trading data. The top ten traded stocks included BATBC, Square Pharma, City Bank, Unilever, BRAC Bank, Techno Drugs, Uttara Bank, Sea Pearl, Trust Bank, and Robi. Except for one, all these shares have a substantial impact on the index.
These shares had limited trading activity for a long time, and their market values hadn’t seen significant growth. If these stocks reach their logical valuations, the index’s height could reasonably double. However, under the current market management system, the index is controlled. This system, along with the media, creates obstacles to the index reaching its desired heights. When share prices and indices rise, the media often sensationalizes and distorts the situation, leading to negative headlines. Misguided expert opinions in the news further confuse investors.
Presently, there are no external people in BSEC’s “mirror room.” However, if outsiders with little market knowledge occupy this space, they will likely tighten control over the index. To strengthen the stock market, it is better if such individuals do not involve themselves directly. They can gather the necessary information from BSEC, DSE, and CDBL without physically intervening.
Last week, the BSEC chairman and three commissioners were absent from the office. Two showed up, but there was no interference in the market. Meanwhile, the head of the DSE board, a professor from the science faculty of Dhaka University, continues in his role. He is not expected to have deep knowledge of economics or the stock market. Moreover, DU professors have proven to be dangerous for both the financial and stock markets, as evidenced by their involvement in both.
The top positions in the DSE administration are occupied by unqualified individuals who have held their posts for years. Over the past 15 years, the DSE board and administration have thoroughly “Awami-ized” the DSE, leading to its current decline to the “B” category.
Together, BSEC and DSE have paved the way for manipulation and looting in the stock market, and the margin system remains in place, much to the detriment of investors. Despite promises to update the margin rules, the current system continues to drain investors’ capital. As a result, many investors, now impoverished, have been forced to leave the market. Approximately 1.3 million investors have had to exit the market after losing their capital.
Under Sheikh Hasina’s leadership, the Awami League government has followed a scorched-earth policy for the past 15 years, destabilizing the structure of every state institution. The economy has plunged into a deep crisis, banks are hollowed out, and liquidity shortages in the financial and stock markets have worsened.
There is no governance in state institutions, nor is there any good news. The weaknesses and failures in management have led to the collapse of economic, social, political, cultural, and even family institutions.
All eyes are now on the interim government led by Dr. Muhammad Yunus. Salim Uddin Ahmed has been entrusted with the Ministry of Finance and Planning. Both are skilled managers, and there is hope for better outcomes in the future.
Fazlul Bari
Writer
