DSEX posts shallowest decline among regional peers in Sept amid global volatility

Infographics: TBS

Bangladesh's stock market showed relative resilience in September, with the benchmark DSEX posting the shallowest monthly decline among major regional equity markets, according to Sheltech Brokerage Ltd's monthly market overview.

The DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), fell 47 points, or 0.85%, month-on-month (MoM), to close at 5,550 at the end of September.

In contrast, major regional indices declined between 2.27% and 6.57% during the month.

Indonesia's IDX Composite recorded the steepest decline among the markets reviewed, falling 6.57%, followed by India's S&P BSE Sensex, which dropped 5.82%.

Malaysia's FTSE Bursa Malaysia KLCI fell 4.33%, while Pakistan's KSE 100 declined 3.96% and Vietnam's VN-Index dropped 3.47%.

Sri Lanka's ASPI and Thailand's SET Index declined 2.46% and 2.27%, respectively, during the month.

The comparatively smaller decline in Bangladesh, however, came amid weak trading activity and broad-based selling pressure, suggesting that the market's resilience was relative rather than a sign of strong buying momentum.

A monthly market overview is a periodic assessment of a stock market's performance during a particular month, covering benchmark-index movements, trading activity, market breadth, sectoral performance, major market-moving events and, in some cases, developments in the money market. Such reports help investors assess the direction and underlying strength of the market over a defined period, according to the Sheltech Brokerage.

According to Sheltech Brokerage, average daily turnover on the DSE fell 25.67% MoM to Tk651 crore in September, while market breadth weakened to 0.56, indicating that declining stocks significantly outnumbered advancing issues. Of the traded securities, 238 declined, 134 advanced and 17 remained unchanged. The market capitalisation also fell by around Tk7,200 crore during the month.

The brokerage attributed the market's performance to several domestic and external factors, including an energy-supply crisis, renewed geopolitical tensions, higher fuel prices and Bangladesh Bank's decision to keep its policy rate unchanged.

The market initially witnessed strong buying interest amid optimism over proposed market-development initiatives by the Bangladesh Securities and Exchange Commission (BSEC). The momentum, however, weakened as concerns over energy supplies intensified following the renewed conflict in the Middle East.

The DSEX subsequently fell below the 5,529.40–5,563.60 support zone, according to the brokerage.

Buying interest returned around mid-month after the BSEC held discussions with leading brokerage firms on the prolonged market downturn. Sentiment received further support from Moody's revision of Bangladesh's economic outlook from negative to stable, along with an improvement in domestic gas supplies.

These developments helped the DSEX move towards the 5,600 level before renewed selling pressure emerged towards the end of the month.

The late-month weakness was driven partly by the government's fuel price hike and Bangladesh Bank's decision to keep the policy rate unchanged, despite market expectations of further monetary easing.

Investors also remained cautious ahead of earnings and dividend announcements from companies with June year-end financial reporting.

Blue-chip stocks showed greater stability than the broader market. The DS30 index, which tracks 30 leading companies on the DSE, declined only 0.23% during the month to 2,108.

Sectoral performance, however, remained largely negative. Ceramics was the weakest-performing sector, falling 4.97% during the month, followed by engineering, down 3.46%, and non-bank financial institutions, which declined 3.28%.

Insurance and mutual funds were among the exceptions, posting gains of 4.87% and 11.79%, respectively, according to the report.

Trading activity remained concentrated in a handful of sectors. Textile stocks accounted for 26.03% of total turnover, followed by insurance at 17.53% and pharmaceuticals and chemicals at 11.61%.

Selective mutual fund and insurance stocks also dominated the monthly gainers. Bangladesh National Insurance gained 62.49%, while First Prime Finance Mutual Fund and ICB AMCL Second Mutual Fund advanced 58.85% and 38.89%, respectively.

On the other hand, BD Thai Food, Sharp Industries and Saif Powertec were among the major decliners, falling 20.82%, 19.67% and 17.20%, respectively.

Sharp Industries, Saiham Textile, Envoy Textiles, IPDC Finance and Malek Spinning were among the most actively traded stocks during the month.

The money market also showed mixed trends in September, with government security yields moving in different directions across maturities.

Yields on short- to medium-term government securities declined sharply during the month. T-bill yields fell by 50–57 basis points, while yields on five-year and 10-year Treasury bonds declined by 77 basis points and 81 basis points, respectively.

In contrast, yields on 15-year and 20-year Treasury bonds increased by 24 basis points each, resulting in a significant steepening of the yield curve at the longer end.

The spread between the 20-year and 91-day securities widened from 19 basis points in August to 97 basis points in September, highlighting the divergent movement in short- and long-term borrowing costs.