Most shares on the Dhaka and Chittagong stock exchanges fell yesterday amid fear among investors that their foreign counterparts would keep pulling out their funds after major economies raised key interest rates.
The renewed apprehension came after the Federal Reserve of the US on Wednesday increased benchmark interest rates by 75 basis points to bring down inflation, the fifth straight hike.
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On September 8, the European Central Bank announced a 75-basis point interest rate rise. The UK and India have also raised their rates recently.
Monetary tightening in the US has led to investors pulling their money out of Asian economies, triggering currency depreciation in most of the economies, said economists at the Asian Development Bank in a blog.
Sharp currency depreciation generally increases inflationary pressures through higher import prices of food and energy and worsens the current account balance, and may thus result in countries having difficulty with paying for their essential imports or servicing external debts, they said.
In fact, foreign investors at the Dhaka Stock Exchange (DSE) and the Chittagong Stock Exchange (CSE) have been selling their shares for months amid continued uncertainty caused by higher inflation and the depreciation of the local currency against the US dollar.
In the morning session yesterday, investors on the DSE were active in buying some stocks at lucrative prices, but the momentum did not last. The sale pressures pulled down the broad index, DSEX, by 48.84 points, 0.74 per cent, to close at 6,515.
The DSES, the shariah-based index, lost more than 1 per cent to 1,421, and the DS30, the index that consists of blue-chip companies, plummeted 1.51 per cent to 2,329.
"The stock market reverted to the losing streak amid global interest rate hikes," said International Leasing Securities Ltd, a brokerage house, in its daily market review.
Losers outnumbered gainers with 117 securities declining, 93 advancing, and 160 remaining unchanged. Turnover, however, rose more than 8.5 per cent Tk 1,810 crore.
Among the sectors, travel rose 7.5 per cent, jute was up 6.5 per cent, and ceramic gained 1.7 per cent. By contrast, pharmaceuticals shed 2.1 per cent and IT gave up 1.2 per cent.
Sea Pearl Beach Resort & Spa was the most successful stock on the DSE, rising 9.98 per cent.
Bangladesh Monospool Paper Manufacturing Company, Far East Knitting & Dyeing Industries, Associated Oxygen, and Nahee Aluminum Composite Panel rose more than 9 per cent.
Orion Pharma suffered the sharpest fall, giving up 9.69 per cent. JMI Hospital Requisite Manufacturing was down 8.21 per cent, while Shahjibazar Power, BD Thai Food & Beverage, International Leasing & Financial Services, Bashundhara Paper Mills, and Kohinoor Chemicals lost more than 7 per cent.
The Caspi, the all-share index of the bourse in the port city, dropped 161 points, or 0.83 per cent, to end the day at 19,183.
Of the 240 issues that traded, 74 advanced, 83 declined, and 83 did not show any price movement. Turnover rose more than 27 per cent to Tk 126 crore.