The country’s economy is stuck in a cycle of crisis, which is directly affecting the capital market. Inflation is on the rise, interest rates are high, production costs have increased, and investor confidence has wavered. Due to these factors, most of the companies listed on the country’s capital market are under pressure on profits, and many companies have gone from profit to loss. Businessmen say that the plight of the capital market will not end unless the challenges of the macro economy are overcome.
As of January, 167 companies listed on the Dhaka Stock Exchange have published their six-month financial reports. It was found that only 68 companies, which is 40 percent of the total companies, have increased their profits. On the other hand, 98 companies, or 60 percent, have shown negative growth in profits. Of these, 15 companies have gone from profit to loss, while 37 companies have increased their losses.
Rupali Haque Chowdhury, the President of the Bangladesh Association of Public Limited Companies (BAPLC), told Liberty News, “Businesses across all sectors are facing decline, particularly in industries like steel, cement, and other smaller industrial sectors, which are in an even worse condition.” However, she believes that if law and order are maintained and public confidence is restored, the business environment will gradually improve, leading to increased profits for companies.
Meanwhile, while 68 companies have reported an increase in profits, the growth rate is not very significant. Only two companies saw a profit increase of over 1000%, while another company achieved more than a 500% profit growth. Five companies experienced growth exceeding 300%, two companies saw an increase of over 200%, 11 companies had a profit growth within the 100% range, and another 11 companies reported a profit rise of over 50%. Leading the profit growth is Sharp Industries, which saw a 1367% increase in profit, followed by JMI Syringe with 1040%, Ifad Autos with 733%, Wimax Electrodes with 400%, and Matin Spinning and Dominage Steel with a 350% profit increase.
On the other hand, the profits of 46 companies have decreased, although they have not yet faced losses. However, 15 companies, which were profitable in the previous six months, have now fallen into losses. The list includes Orion Pharma, Baraka Patenga, Information Services, Sea Pearl, Intec, Anwar Galvanizing, Gemini Sea Food, Safco Spinning, Evans Textile, Meghna Cement, Amara Technologies, Eastern Cable, Basundhara Paper, Deshbandhu Polymer, and Energy Pack.
The number of companies experiencing increased losses has risen to 37. While these companies incurred losses during the July-December period of 2023, the extent of their losses has significantly increased in the same period of 2024. The company facing the highest loss is Unilima Yarn, with a 1950% increase in its losses. It is followed by Silva Pharma with a 258% increase, Peninsula with 255%, Dhaka Dyeing with 232%, and BBS Cables with 223%.
Analysts suggest that the increase in production costs, driven by high interest rates and inflation, is directly impacting the profitability of companies. DSE Director Richard D. Rosario mentioned that most companies rely heavily on bank loans, and with rising interest rates, the pressure on them has further intensified.
Dr. Mohammad Abdur Razzak, Chairman of the private research institution Rapid, believes that the stock market is suffering from structural weaknesses. He suggests that this crisis will not be resolved unless strong companies enter the market and the market depth is increased.
Dr. Khondkar Golam Moazzem, Research Director of the Center for Policy Dialogue (CPD), has raised concerns over the transparency of financial reports in the stock market. He believes that addressing the structural flaws in the market is crucial, or else there will continue to be a crisis of confidence.
The spokesperson for the Bangladesh Securities and Exchange Commission (BSEC), Mohammad Rezaul Karim, stated that the profits of companies depend on their own management. However, he mentioned that the overall situation could improve if inflation and interest rates decrease. To revive the stock market, structural reforms, rebuilding trust, and creating a favorable environment for long-term investments are necessary.
According to experts, the main reasons for the crisis in the country’s stock market are economic instability, inflation, high-interest rates, structural weaknesses, and a lack of investor confidence. They believe that if economic stability is restored, and interest rates and inflation are controlled, companies could recover their business. However, effective policy support and improvements in the market structure will be required to achieve this.
LND/SAKIB
