Shares in 58 listed companies and mutual fund units were traded below their face value of Tk10 on December 27, the last day of 2018. The stocks, particularly the mutual funds, remained under their face value for most of the period of the outgoing year.
A total of 33 mutual fund units out of 37 in the same category listed at Dhaka Stock Exchange (DSE) lost their original values, according to DSE data.
Of 25 other listed ones, 11 belong to textile sector, six are from financial institution, two from the bank category, and one each from engineering and insurance sectors, while the remaining four belong to miscellaneous sectors.
“The big losers had been the investors of mutual fund units throughout 2018,” said Shakil Rizvi, president of DSE Brokers' Association (DBA).
Analysts blamed the fund managers of mutual funds for not making the units attractive to investors as they did not liquidate the funds within the deadline. They said investors lost confidence in fund units, while fund management lacks transparency.
According to DSE data, there are 348 listed firms at the prime bourse, of which 311 are companies and 37 are mutual funds.
Speaking to the Dhaka Tribune, stock market analysts said investors are unwilling to invest in mutual funds due to lower returns. Additionally, they said some of the companies are unable to offer dividends, leading to shares of these companies being undervalued.
Mohammad Emran Hasan, CEO of Shanta Asset Management Limited, said: “Usually, prices of mutual fund units remain very close to their net asset value (NAV). However, they are unusually lower in Bangladesh, making investors unsatisfied with the return of investment in mutual fund units.”
Moreover, investors lost confidence on mutual funds as fund managers did not liquidate funds within the deadline, as fund management lacks transparency, Emran added.
“Lack of efficiency in fund management is another reason for poor performance, which brings down unit prices,” he added.
Speaking about the current situation of the stock market, Shakil Rizvi, the DBA president, said: “The stock market has been going through a downtrend in the last couple of months, which may have led to lower prices.”
However, that does not mean they are junk shares and one can avail the opportunity of buying them at lower prices for the future, added Shakil.
Four mutual funds whose units were traded on December 27 above face value are: Prime Finance First Mutual Fund; Grameen One Scheme Two; Southeast Bank 1st Mutual Fund; and NLI First Mutual Fund. All other mutual funds were traded below their face value.
Eleven textile companies, out of 53 in the category, that traded below face value are: Alif Manufacturing Company; C&A Textiles; The Dacca Dyeing and Manufacturing; Delta Spinners, Familytex (BD) Limited; Generation Next Fashions; Maksons Spinning Mills; Metro Spinning; RN Spinning Mills; Tallu Spinning Mills; and Tung Hai Knitting & Dyeing Limited.
The banks being traded below face value were ICB Islami Bank and National Bank Limited.
Appollo Ispat Complex Limited was the only company that traded below face value in the engineering category.
Bangladesh Finance and Investment, Fareast Finance & Investment, First Finance, Peoples Leasing and Financial Services, Premier Leasing & Finance, and Prime Finance & Investment Ltd are the financial institutions trading below face value.
Finally, Federal Insurance Company Ltd, Beximco Synthetics Ltd, Keya Cosmetics Ltd, Bangladesh Services, and United Airways (BD) Ltd were also traded below their face value at the DSE on the last trading day of 2018.
