If investors hold the stocks of well-performing companies, they are usually awarded better returns since firms with strong fundamentals fare well and pay healthy dividends and their market value rises. The standard appeared to be the opposite in Bangladesh between January and April.
Investors who owned the issues of good companies that provided at least 50 percent dividend in their last financial year incurred losses in the first four months of 2024. On the other hand, people who bet on low-performing companies, which declared less than 15 percent dividends, saw their portfolio inflate.
It came as the stocks of United Power, Walton, ACI, Renata, British American Tobacco, and Bangladesh Submarine Cables plummeted more than 30 percent in the four-month period. Grameenphone shares shed 17 percent.
In contrast, Bangladesh Monospool Paper Manufacturing, Taufika Foods and Lovello Ice-Cream, Paper Processing, Khan Brothers PP Woven Bag, and Beach Hatchery surged more than 50 percent, handing an unusual return to their holders in a market struggling to retain investors.
The disappointing stock market performance of good companies has left Nur Mohammad, a banker and a trader, upset since his portfolio, which includes shares of BATBC, Walton and Square Pharmaceuticals, did not yield the level of returns he had expected.
“Analysts always say if you invest in good stocks, you will never lose money. I always listen to their advice and I have invested in good companies, but the value of my portfolio has fallen by 20 percent.”
He alleged that some of his friends purchased the stocks of Lovello after a rumour went around that manipulators would drive up its price. The rumour turned out to be true and the share soared 30 percent.
“How will a good investor stay in such a manipulation-driven market? It is not a market for good investors,” Nur Mohammad added.
United Power Generation, a blue-chip company that paid 80 percent cash dividend in its last financial year, dropped 47 percent in January-April while electronics giant Walton, which provided a 300 percent cash dividend, dipped 42 percent.
Stocks of ACI, a well-known company that owns several popular brands and provided 40 percent cash dividend, gave up 46 percent. Renata, one of the top pharmaceutical companies in Bangladesh, gave a 62.5 percent cash dividend in its last financial year and its shares fell 37 percent.
