COVID hits stock market hard

Formulate new policy to avoid adverse outcomes

The recent spike in COVID 19 cases has hit our stock market again as investors have lost Tk 24,174 crore in three consecutive weeks of fall in prices.

According to a report published in this daily on Sunday, the market capitalisation of the DSE declined 5 percent during the time to close at Tk 458,680 crore in recent days. The DSE broad index (DSEX) went down by 1.06 percent or 56.69 points during the last week to settle at 5,270.53. The DSEX went down below 5,300- point mark, the lowest one since 27 December 2020. DSEX went down more than 493298 points in the past three consecutive weeks.

The stockholders are selling off their shares at losses as they were overblown for panic sales amidst frightening surge in COVID 19 infection and deaths in recent days.

Stock holders and investors would need to keep a 

watch vigorously and rebalance their asset 

provision to avoid potential losses

This happened because watchful stock holders are selling their securities to avoid supplementary losses on their portfolios because they begin to fear a hostile impact on the economy and earnings due to COVID.

All in all, the effects could lead to a decline in investments, stock prices, trade volumes and market value of the companies listed in the stock markets. Extensive selling pressures rather than buying could also result in lesser prices and trade volumes, which will be a stern task to recover from. 

From a very fundamental viewpoint COVID impacts on revenue growth, profitability, cash flows and business likelihoods. Here the government can play its part by adding stimulus and government backed bonds in hopes for a sustainable economic recovery. Therefore, stockholders and investors would need to vigorously keep a watch and rebalance their asset provision to avoid potential losses.