• Tuesday, Feb 19, 2019
  • Last Update : 11:12 am

Shares of non-productive companies fall

  • Published at 12:49 am July 22nd, 2018
dhaka stock market DSE
File photo of Dhaka Stock Exchange Limited Dhaka Tribune

'People should invest carefully. They should stay away from investing in junk shares'

Shares of non-productive (closed) companies have fallen after the Dhaka Stock Exchange (DSE) delisted two of them, generating concern among investors.

On Wednesday, DSE authorities delisted Rahima Food Corporation Ltd and Modern Dyeing & Screen Printing Ltd as they incurred constant losses and did not engage in production for over five years. However, their shares were still being traded on the DSE at inflated prices, in spite of their non performing status.

Stockholders of the capital market posit that the decision had a negative impact on the shares of other non-productive companies by generating fears that they would face a similar fate.

The delisting came into effect on Thursday, the last trading day of the previous week, leading to fall in the prices of 11 non-productive companies.

These non-productive companies are Meghna Pet Industry, Meghna Condensed Milk, Bangladesh Welding Electrodes Limited, Emerald Oil Industries, Beach Hatchery Limited, Dulamia Cotton Spinning Mills, United Airways (BD), Tung Hai Knitting and Dyeing Limited, Samata Leather Complex, Khulna Printing and Packaging Limited, and C & A Textiles Limited.

“These two companies have not been in production for long. After conducting an investigation we found that it is not possible for them to resume production soon. That is why we decided to delist the companies, effective from Thursday,” DSE Managing Director KAM Majedur Rahman told the Dhaka Tribune.

He said they always advise people to refrain from buying shares of non-productive companies, but their advice goes unheeded.

Meanwhile, market-related people hailed the decision, saying that this initiative is good for the capital market.

Former caretaker government adviser AB Mirza Azizul Islam said: “This is a right decision. But it should have been done much earlier. A company has been closed since 2010, but it was only delisted in 2018. The company should have been delisted many years ago.”

Shanta Rahman, who purchased shares of a closed company, said, “We were not aware of the matter while purchasing the shares. We bought the shares for capital gain. Now I am facing a big loss.”

Policy Research Institute (PRI) Executive Director Ahsan H Mansur said: “People should invest carefully. They should stay away from investing in junk shares.”

Rahima Food Corporation Ltd was listed on the DSE in 1997. However, the company has not been in the production since 2013, having shut down after incurring losses.

Modern Dyeing & Screen Printing Ltd was listed on the DSE in 1988, and the company closed production in 2010.