Stocks surge on vaccine hopes

The key index of Dhaka Stock Exchange rose by a whopping 216.89 points yesterday to post the second-highest single-day increase in history on news of India’s coronavirus vaccine approval that also boosted hopes for Bangladesh.

On January 19 last year, the DSEX, the benchmark index of the premier bourse, climbed 232 points, an all-time high.

Thanks to the seven-day rally, the key index added 520 points, or 10 per cent, to 5,618.95.

Turnover, another important indicator of the market, surged 24 per cent to Tk 1,925 crore yesterday.

“As India has approved the Covid-19 vaccine, it has created hopes for Bangladesh,” said Abdul Muttalib, a high net-worth investor.

India’s pharmaceutical regulator, the Central Drugs Standard Control Organisation, announced yesterday at a press briefing that it approved two coronavirus vaccines: one developed by AstraZeneca and the Oxford University and the other by Bharat Biotech, for emergency use.

Bangladesh has signed an agreement with the Serum Institute of India and Beximco Pharmaceuticals to purchase three crore doses of the vaccine developed by AstraZeneca and the Oxford University.

In India, the Oxford-AstraZeneca vaccine is being manufactured by the Serum Institute of India, the world’s largest vaccine manufacturer. It says it is producing more than 50 million doses a month and aims to ramp up production to 100 million doses after receiving regulatory approval, according to the BBC.

Bangladesh expects to start getting delivery of the vaccines from February.

“The vaccination will help the economy rebound, so stock investors are pouring money into potential securities,” Muttalib added.

Investors hope that the secondary market will see a massive investment flow in the coming months, said Mohammed Rahmat Pasha, CEO of UCB Capital Management.

As the interest rate on bank deposits is low because lenders are flushed with additional cash amid lower credit demand, people will rush to the stock market.

The weighted average interest rate on deposits fell to 4.73 per cent in September, the lowest in a decade. The excess liquidity in the banking industry stood at Tk 169,651 crore in September, Bangladesh Bank data showed.

The change in the policy for a minimum investment for the initial public offering will bring in new investment, Pasha said.

The Bangladesh Securities and Exchange Commission decided that every stock investor would get primary shares, but they will have to have a minimum investment of Tk 20,000 in the secondary market.

Three to four lakh beneficiary owner’s accounts are used for only IPO application, so around Tk 1,500 crore may enter the secondary market, Pasha said.

India’s vaccine approval and Beximco’s investment in its power company fuelled the stocks at the beginning of the day, and the momentum continued until closure.

Beximco bought 3.5 crore shares of Beximco Power for Tk 35 crore from Beximco Holdings, the company said in a disclosure yesterday.

With the purchase, Beximco will own 7.5 crore shares in BexPower, which is 75 per cent of the total shares issued.

BexPower holds 80 per cent shares in Teesta Solar and Korotoa Solar, which entered into a power purchase agreement with the Bangladesh Power Development Board and an implementation agreement with the government to supply 200 megawatt and 30MW solar electricity respectively. The plants will be established in Gaibandha and Panchagarh.

Of the listed 361 companies on the DSE, 253 advanced, 58 declined, and 50 closed the day unchanged.

Beximco topped the gainers’ list as it advanced 10 per cent followed by Saif Powertec, International Leasing & Financial Services, Islamic Finance & Investment, and Bangladesh Submarine Cables.

Beximco Pharmaceuticals was the most traded stocks with its shares worth Tk 198 crore changing hands, followed by IFIC, Beximco, LafargeHolcim Bangladesh, and LankaBangla Finance.

Rahima Food Corporation gave up the most at 7.18 per cent, followed by Daffodil Computers, Eastern Insurance, Imam Button and Aman Cotton Fibrous.

The benchmark index of the Chattogram Stock Exchange, CSCX, gained 406 points, or 4.32 per cent, to stand at 9,810.

Of the traded stocks, 208 rose, 42 fell, and 33 remained unchanged.