DSEX plunges 138 points as Middle East tensions rattle investors

Infographic: TBS

Stocks at the Dhaka bourse tumbled yesterday as escalating geopolitical tensions in the Middle East rattled investors, triggering broad-based selloffs and snapping the market's recent upward momentum.

The benchmark DSEX index of the Dhaka Stock Exchange (DSE) plunged 138 points, or 2.47%, to close at 5,461. The blue-chip DS30 index also suffered a steep decline, shedding 52 points, or 2.40%, to settle at 2,117. 

Market breadth remained overwhelmingly negative, with 353 issues declining against only 30 advances, while six securities remained unchanged.

Turnover dropped 18% to Tk775 crore, reflecting cautious participation as investors largely chose to stay on the sidelines. 

The market capitalisation of the premier bourse plummeted by around Tk8,000 crore to Tk7.10 lakh crore in a single session.

Major index draggers included BRAC Bank, Islami Bank, Square Pharma, Walton and BAT Bangladesh, whose declines weighed heavily on the benchmark indices.

According to EBL Securities, the capital market's upward trajectory faced a setback amid intensifying geopolitical unrest in the Middle East. 

In its daily market review, the brokerage said the conflict sparked widespread panic among investors, prompting them to adopt a cautious stance and closely monitor further developments before making fresh commitments.

The market opened with a sharp fall, with the DSEX losing more than 200 points at the opening bell as aggressive selling pressure dominated early trading. Although the index managed to recover part of the initial losses, the broader market remained under persistent downward pressure throughout the session, with most stocks trading in the red, the brokerage noted.

Market participants now remain watchful of further developments in the Middle East, as any escalation could deepen volatility in the coming sessions.

Ashequr Rahman, managing director of Midway Securities, told The Business Standard that Bangladesh, as a net fuel-importing country, is particularly vulnerable to the ongoing conflict involving Iran, the United States and Israel. He said the country imports at least 40% of its total fuel requirement through the Strait of Hormuz, a critical shipping route now at risk due to the tensions.

If the conflict prolongs, Bangladesh could face fuel shortages and price hikes stemming from supply disruptions, Ashequr Rahman warned. Such a scenario could hamper industrial production and power generation, ultimately affecting the broader economy. The uncertainty surrounding energy supplies has unnerved investors, prompting panic-driven selling that dragged down stock prices across sectors.

However, Rahman observed that the scale of panic was relatively contained compared to previous crises. In past episodes of severe uncertainty, many stocks turned buyer-less, intensifying the downturn. This time, although prices fell sharply, buyers were still present in the market, suggesting that the initial panic may not necessarily persist in the coming days.

On the sectoral front, bank stocks accounted for the highest turnover at 24.2%, followed by pharmaceuticals at 13.1% and textiles at 8.7%. All major sectors posted negative returns, with travel and leisure suffering the steepest decline at 4.2%, followed by paper and printing at 3.7% and financial institutions at 3.2%.

Despite the overall slump, a handful of stocks bucked the trend. National Bank surged 10%, leading the gainers' chart, amid news that it is set to secure Tk1,000 crore in financial assistance from the central bank. Prime Finance also rose 10%, while Shinepukur Ceramics, Northern Jute and Union Capital posted notable gains.

Among the worst performers were BD Welding, which dropped 7.61%, Popular Life First Mutual Fund, BD Thai Food, Makson Spinning and AFC Agro, all posting losses of more than 6%.

The bearish sentiment also spilled over to the port city bourse. At the Chittagong Stock Exchange PLC, the CSCX index fell 165 points to 9,421, while the CASPI index declined 245 points to close at 15,351. Turnover at the exchange stood at Tk12.78 crore.