DSE forms body to scrutinize prospectus of IPO-seeking firms
DSEX, the benchmark index of Dhaka Stock Exchange, dropped to its three-year low by breaking 4,700-point mark yesterday.
The index closed at 4,699.2 points losing 1.12% during the session while CASPI, broad index of Chittagong Stock Exchange, declined 0.94% to close at 14,325.4 points.
DSE Shariah-based index DSES declined 1.50% to end at 1,074.5 points, while blue-chip index DS30 went down by 1.16% to close at 1,648.9 points.
Participation in the Dhaka Stock Exchange stood at Tk305.9crore during the session, which was Tk257.1 crore in the previous session.
Meanwhile, the DSE formed a six-member review committee to scrutinize the prospectus of Initial Public Offerings (IPO’s)-seeking companies.
DSE individual director MD Masudur will head the committee while DSE director Siddiqur Rahman Miah, Minhaz Mannan Emon, acting managing director Abdul Matin Patwary and DSE listing department head Jalilur Rahman are other members.
The DSE decision came following an instruction from the Bangladesh Securities and Exchange Commission last week to ensure quality IPOs in the stock market.
The DSE will also form a 10-15 member expert panel comprising financial analysts and audit firm representatives to assist the review committee.
The committee will submit its terms of reference within two working days for approval from the board, says a DSE press release .
“The committee has been formed as part of the continued process of developing the market. While forming the expert panel, we will ensure that the panel members are free from any conflict of interest,” Masudur Rahman, committee head, said.
During the eight-year tenure of incumbent BSEC Chairman M Khairul Hossain, around 86 IPOs were approved, while around half of them were alleged to be of low qualities.
It was alleged that a good number of low quality firms, resorting to malpractices, often showed higher profitability in their annual financial statements while applying for IPO approvals to the securities regulator during the last eight years.
A section of BSEC senior officials said although the commission knew about weak companies who provided forged financial statements for IPOs, it kept approving those out of vested interest.
After listing, it was found that the earning per share (EPS) of most of the firms started falling, suggesting that their earlier earnings reports were either overestimated, or fake, an expert said.
The agitating investors said that lack of regulatory control over the stock market, ‘filthy’ IPO approval with huge amount of placement shares, relaxed punishment of fraudsters, manipulators and errant companies shattered investors’ trust and confidence.
Bangladesh Pujibazar Biniogkari Oikya Parishad president Mizan ur Rashid Chowdhury said: “The BSEC chairman is working for the issuer companies and stock brokers, not for the investors.”
The insurance sector contributed 18% of the total turnover while engineering, pharmaceuticals and textile sectors contributed 14.6%, 12.3% and 10.3% respectively, showed the daily market analysis of UCB Capital Management Limited.
A total of 14 transactions on seven stocks worth Tk4.4crore were executed in the block market of DSE, showed Detailed DSE Market Statistics.
National Tubes Ltd secured the leadership position on the top turnover chart with a turnover of Tk15.3 crore with its share price closing at Tk140 per share. The stock was followed by Sonar Bangla Insurance Ltd with Tk13.8crore, Standard Ceramic Industries Ltd with Tk9.5 crore, Monno Ceramic Industries Ltd with Tk7.8 crore and VFS Thread Dyeing Ltd with Tk6.9 crore.
Standard Ceramic Industries Ltd secured the highest gain of 20.5% during the session. The stock was followed by Monno Ceramic Industries Ltd with 9.3%, Metro Spinning Ltd with 7.6%, Monno Jute Stafflers Ltd with 7.5% and Mercantile Insurance Co Ltd with 6.7%.
Salvo Chemical Industry Ltd turned out the worst loser with its price declining by -33.6%. The stock was followed by BD Thai Aluminium Ltd with -28.2%, Renwick Jajneswar& Co with -26.5%, Generation Next Fashions Ltd with -25% and Khan Brothers PP Woven Bag Industries Ltd with -19.7%.
Among the traded issues 57 gained, 260 declined and 36 remained unchanged during the session in Dhaka Stock Exchange while 63 gained, 175 declined and 16 remained unchanged in Chittagong Stock Exchange.
The Dhaka Stock Exchange currently has a market capitalization of Tk356,205crore with the benchmark index, DSEX down by -12.75% since the beginning of this year.