Stock investments in less desirable companies registered increases, fueling weekly growth
The Bangladesh Stock Market experienced a significant surge last week, with the benchmark DSEX index rising 24.7 points or 0.5% to close at 5,375. This upward trend was evident across the market, as 241 issues advanced against 129 that declined, indicating a positive market breadth.
Average daily turnover surged 31.6% to Tk907 crore, hitting Tk1,000 crore in a single session. Investor activity was particularly concentrated in a few leading stocks, including Bangladesh Shipping Corporation, Beximco Pharmaceuticals, Orion Infusion, City Bank, and Beach hatchery.
The paper sector led gains, while mutual funds lagged. Notably, Meghna Cement was another significant gainer, increasing by 28.33%.
However, the surge was not without its challenges. Profit-taking in banking scrips and concerns over draft amendments to margin rules injected volatility into the market. Troubled banks and non-bank financial institutions suffered the steepest fall, with Exim Bank emerging as the worst weekly performer.
The rallies in the market were not limited to high-performing stocks. Eight of the top ten gainers on the Dhaka Stock Exchange (DSE) belonged to the "B" or "Z" categories, which are categories for companies with poor track records, no dividends, or closed operations. Shyampur Sugar and Zeal Bangla Sugar, two junk scripts, gained 24.53% and 22.59% respectively.
The top performer on the DSE was Information Service Network (B category), which soared 47.26% to Tk72.60 despite having no calculable price-to-earnings (P/E) ratio due to incurring a loss in the first nine months of FY25. A P/E ratio of 926, as seen in Bangladesh Autocars, is considered a red flag, suggesting that prices are completely detached from company earnings.
Analysts caution that the rallies in low-performing and junk-category stocks are speculative and not backed by fundamentals. Market insiders warn that while the overall sentiment has improved, rallies in fundamentally weak companies could distort investor behavior.
In an attempt to address these risks, the Bangladesh Securities and Exchange Commission (BSEC) has proposed barring B- and Z-category stocks from margin loans in its draft rules, published on 19 August for public feedback.
Despite these concerns, EBL Securities noted that the benchmark index regained momentum after a brief correction, supported by renewed investor interest in selective large-cap stocks. The broader market showed improvement, with 241 issues advancing against 129 that declined.
As of now, there are no publicly available or specific reports naming which companies listed on the Bangladesh Securities and Exchange Commission have been the most active or recognized this week due to speculative trading activities.
