Z stocks rule last week's trade

Infographics: TBS

The Dhaka Stock Exchange (DSE) witnessed a peculiar and highly speculative trend last week, where fundamental indicators appeared to take a back seat to a frenzy of trading in low-performing companies.

While the broad market indices ended in green, the weekly performance charts were overwhelmingly dominated by Z-category firms – companies typically characterised by poor financial health, non-payment of dividends, or irregular operations. 

This surge in "junk stocks" eclipsed the performance of established blue-chip companies, signalling a market driven largely by rumours and aggressive speculative behaviour rather than long-term investment strategies, said an analyst of a brokerage firm.

According to the weekly market review by EBL Securities, market-wide speculative trading pushed these loss-making scrips to the top of the gainers' list between 16 November and 20 November.

Leading the charge was Khulna Printing and Packaging, a non-functional firm, which saw a staggering rise of 51.76% in just five trading sessions. It was closely followed by International Leasing and Financial Services and Bangladesh Industrial Finance Company (BIFC), explicitly known for their financial struggles, which rallied by 50.68% and 50% respectively.

National Bank also joined this unusual rally with a 50% gain, while Fareast Finance, Peoples Leasing, Maksons Spinning, Nurani Dyeing, and Hamid Fabrics posted gains ranging from 40% to over 47%.

According to the DSE, despite the questionable quality of the top gainers, the overall market metrics showed a robust recovery.

The benchmark DSEX index jumped by 166 points, or 3.54%, to settle at 4,869, while the blue-chip DS30 index gained 26 points to close at 1,877.

The DSE SME index, DSMEX, outperformed the main board in percentage terms, rising by a massive 95 points or 13.13% to settle at 824.

The market capitalisation swelled by Tk7,800 crore, and daily average turnover increased by 12% to Tk397 crore, indicating renewed liquidity in the system.

Out of all traded issues, 347 advanced, while only 18 declined and 4 remained unchanged.

EBL Securities noted that the capital bourse observed a continued recovery mode throughout most of the week as bargain hunters capitalised on the recent sharp market correction.

Investors were busy accumulating beaten-down scrips amid widespread speculation regarding a possible relaxation in the forthcoming verdict on margin rules, it added.

However, the brokerage firm cautioned that broader investor participation has yet to fully rebound. Major investors preferred to remain watchful amid persistent concerns over uncertain market momentum, leaving the field open for retail speculation.