The better performance of the state- owned companies helped DSE to end in the positive note, gaining 25 point to 4,507 points
Share prices in most of the 18 State- owned Enterprises (SoE) publicly traded companies shot up on Monday at Dhaka Stock Exchange as investors went on buying spree after the announcement of offloading stakes of seven government firms.
According to DSE data, share prices of 14 out of 18 government companies registered price gain as high as 9.84%.
Share prices in three SoEs , however, dipped below their last day prices.
The better performance of the state- owned companies helped DSE to end in the positive note, gaining 25 point to 4,507 points.
Finance Minister AHM Mustafa Kamal on Sunday announced that seven state-owned companies in the power and energy sector were going to enter in the capital market soon to shore up the wobbly share market.
Talking to Dhaka Tribune, stock market stakeholders said the news of offloading more government shares inspired the investors to pour in money in those companies.
“It is assumed that the government will revalue the prices of shares and offload their stakes at set prices and offload those in the secondary market instead of Initial Public offering (IPO) offerings through direct listing,” Shakil Rizvi, a director of Dhaka Stock Exchange (DSE), told the Dhaka Tribune.
The investors thought the prices of existing shares would go up after revaluation and they would be able to sell those at higher prices, said the stock broker.
As a result, both institutional and the general investors went on buying spree to buy shares at lower prices and sold at higher rates, he added.
Direct listing is an option for profitable companies that do not prefer the existing IPO method. Under the system, share prices keep open for bidding for a certain period. Then the price is set making an average between the highest and the lowest rates.
Later, the shares are traded based on the buyers offered prices.
Monday, the Investment Corporation of Bangladesh (ICB) and other subsidiaries of state- owned banks might have bought shares of government companies, pushing the prices up, a stock broker told Dhaka Tribune.
But the government initiative on offloading more shares was a positive move but this should not be at higher prices, which could risk investment in future, he added.
“The government has asked managements of the state- owned companies for quick preparations in offloading their shares,” Company secretary of Ashuganj Power Mohammad Abul Mansur told Dhaka Tribune.
There are two methods for offloading shares--IPO and Direct listing.
“Since we are running short of time we will prefer the method that requires less time, meaning direct listing” he added.
The seven companies to offload shares gradually are- Titas Gas Transmission & Distribution Company Limited, Power Grid Company of Bangladesh, North West Power Generation Company, Electricity Generation Company of Bangladesh Limited, Ashuganj Power Station Company Limited, BR Powergen Ltd and Gas Transmission Company Ltd.
According to the DSE data, share prices of Titas Gas rose by 9.84% to Tk34.60, Usmania Glass share prices jumped by 9.84% to Tk46.80 , 2.58% of Atlas Bangladesh, Eastern Cables jumped by 3.17%, National Tubes 3.01%, Renwick Jajneswar 0.29% and Dhaka Electric Supply Company (DESCO) 1.97%, Eastern Lubricants 0.85%, Jamuna Oil 1.15%, Meghna Petroleum 1.44%, Padma Oil 2.77%, Power Grid 4.86%, Bangladesh Shipping Corporation 5.01% and Bangladesh Submarine Cable edged by 3.10%.
On the other hand, share prices of Shyampur Sugar Mills, Zeal Bangla Sugar Mills and Rupali Bank declined by 3.72%, 1.22% and 0.33% respectively.