Question

Write an article on “COVID 19 Impact on Bangladesh share market and its future Dividend”.
You have to discuss your views on the changes of share price, EPS, share volume, future
cash/stock dividends due to COVID 19 situation.

Answer 1

Before Covid-19, cracks started to show in the economy of Bangladesh in the form of a banking crisis. While our nation registered steady GDP Annual Growth over the last 10 years (an impressive 8.2 percent last year), bad banking practices could no longer be ignored and the tiring economy was starting to reveal the growing systematic weakness in the banking sector. And everyone knows, if the banking sector is weak then the stock market will be weaker.

Since the stock market crash of 2010, Dhaka Stock Exchange (I will refer mainly to the data from DSE as it accounts for over 90 percent of turnover between the two bourses in Bangladesh) has had a very challenging time in regaining a sustainable bull run. The period between May 2, 2016 and January 3, 2018 showed promise with the DSE General Index (DSEX) rising from 4,171 to 6,318 (a 2,147 point increase, up by 51.47 percent).

However, right after the 2018 Bangladesh general elections, the market started another bear run. Quite surprising since stock markets love stability and the re-election of this current government should have signaled a continued recovery.

But that was not the case as the DSEX fell from 6,318 on January 3, 2018 to 4,768 on February 17,, 2020, a decline of 1,550 points. Many in the industry always felt the divergence between the impressive GDP growth status of Bangladesh and the lackluster performance of the DSEX over the 10 year period.

Global stock markets saw almost a V-shaped recovery during the coronavirus pandemic. But Bangladesh's stock market is an exception.

In fact, Bangladesh's stock market followed suit when the global stocks dropped. But it has refused to make a turnaround when the global stocks rose.

The suspension of trading for more than two months and the policy intervention to stop the fall of the index were a massive blow

Earnings of mostly all the company have come down. So it has made a very low probablity for the companies to give dividend. Covid-19 destroyed profits of the company, earning per share will be too low after covid period.

The banking sector will face liquidity pressure as deposit growth and loan recovery also declines. Private sector credit growth might go down during March 2020 to June 2020. Cutting the cash reserve requirement (CRR) by 1 per cent would add approximately inject Tk. 130 billion into banking sector liquidity.