Risky, loss-making stocks surge as speculative buying lifts market
Analysts said such price movements are largely detached from company fundamentals and are often fuelled by speculative positioning than by any meaningful improvement in earnings prospects or balance-sheet strength.
The Dhaka Stock Exchange (DSE) saw a moderate rise yesterday (14 January), driven largely by sharp price hikes in several risky and loss-making stocks, raising concerns among market participants about speculative activity overshadowing fundamentals.
The benchmark DSEX advanced 19 points, or 0.40%, to close at 4,966, while the blue-chip DS30 index gained 9 points to settle at 1,908. Despite the positive index movement, overall trading activity weakened, with turnover slipping 4% to Tk369 crore.
Market observers noted that the day's rally was heavily influenced by aggressive buying in financially weak companies, many of which have a history of losses, poor governance, or regulatory challenges.
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Shares of FAS Finance and Peoples Leasing topped the gainers' chart after hitting the upper circuit, while Prime Finance and Fareast Finance also posted near double-digit gains. BD Welding and BD Thai Food joined the rally, continuing a recent trend where low-priced and high-risk stocks attract short-term traders seeking quick gains.
Analysts said such price movements are largely detached from company fundamentals and are often fuelled by speculative positioning than by any meaningful improvement in earnings prospects or balance-sheet strength.
Notably, several of the top gainers came from the non-bank financial institution (NBFI) segment, which has been under prolonged pressure due to weak asset quality, liquidity constraints and, in some cases, regulatory action.
Despite these challenges, their share prices surged as retail investors chased momentum amid a lack of clear direction in fundamentally strong stocks.
In contrast, a number of companies faced selling pressure, with Bangladesh Industrial Finance Co Ltd (BIFC) leading the losers after shedding the maximum allowed limit. Shares of Shyampur Sugar, Bay Leasing, HR Textile and Meghna Cement also declined notably.
Turnover concentration remained limited to a handful of stocks, with ACI, Square Pharmaceuticals, City Bank, Orion Infusion, Dominage Steel and Saiham Textile featuring among the most traded issues.
However, traders pointed out that broader market participation remained subdued, as institutional investors stayed largely on the sidelines.
The Chittagong Stock Exchange mirrored the positive sentiment, with its CSCX index rising 21 points to close at 8,612, while the CASPI index added 30 points to finish at 13,915. Turnover at the port city bourse stood at Tk8.59 crore.
