Treasury bonds push DSE market cap by 48%, yet no trade on trial session

Treasury bonds that went live on trial trading in the bourses on Monday pushed up the total market capitalisation of the Dhaka Stock Exchange (DSE) by more than 48% to Tk7.725 lakh crore, from Tk5.22 lakh crore last week. 

However, the trial trading session was a failure in terms of linking the central bank's Beneficiary Participants' Identification Accounts (BPID) and the capital market's Beneficiary Owners' Identification Accounts (BOID) in time.

Due to failure in timely data transfer from the central bank ecosystem to the capital market platform, no successful trade of the government debt securities took place in the Dhaka Stock Exchange (DSE) and the Chattogram Stock Exchange (CSE), despite sufficient buy orders on the electronic trading screens.

The DSE hoped in a statement, solving all the practical issues, the timely delivery of the government securities would be ensured by the next one or two days and only then the bourse would start exchange trading of government securities.

Exchange trading made treasury bonds better accessible to the capital market investors and is going to create a bonafide secondary market for the most important fixed income instrument, said Chartered Financial Analyst Asif Khan, a partner of Edge Asset Management. 

"We have been buying-selling treasury bonds in the central bank platform through banks and it can be done more conveniently through our BOID now," he said, adding that his firm as the asset manager of two mutual funds is looking for opportunities in the treasury bonds. 

The previous option to buy and sell treasury bonds through banks in the central bank's market ecosystem will continue like before. 

According to a 2019 tripartite agreement among the Bangladesh Bank, the Dhaka Stock Exchange and the Bangladesh Securities and Exchange Commission (BSEC), all the outstanding treasury bonds and upcoming ones will be automatically listed in the bourses while the listing fees will remain waived for the sake of building and popularising the much needed secondary market for government securities that offers lucrative fixed income returns alongside the fact that government is considered the last player to default in the debt market.

Stocks suffer the worst selloff since 22 May

Meanwhile, on Monday, Dhaka-Chattogram stocks on their way to recovery have suffered the worst selloff since 22 May, when Taka began to depreciate against the dollar. 

DSEX, the broad based index of the DSE, closed 1.82% lower at 6,449 on Monday to blow the aggressive speculative traders who were overexposed in the trendy stocks amid the fact that one-third of the DSE blue-chip stocks and over 52% of the total scrips were stuck on the price floor the BSEC imposed at the end of July. 

Analysts blamed the decade-high 9.5% official inflation, the Bangladesh GDP growth forecast cut by the World Bank to 6.1% from previously estimated 6.7% for the 2022-23 fiscal year and a building up upward pressure on interest rates for the massive stock selloff on Monday. 

Only 19 scrips managed to stay afloat in green while 167 suffered declines and 182, mostly because of the price floor, remained unchanged in the DSE. 

Rumours regarding some sort of withdrawal of two separate steroids — price floor by the BSEC and interest rate cap in the banking industry's retail loans segment might not remain there in coming days — created a panic in the stock market. 

BSEC top officials, however, turned down any possibility of revoking the unconventional floor in individual stock prices. 

Life price floor in the bourses, stock investors also consider the unconventional measure of interest rate caps a boon for them as it helps keep corporate finance cost low and fuels stock market fund inflows. 

Amid the massive selloff, DSE registered Tk1,417 crore transactions on Monday, up from Tk1,170 in the previous session.