DSE moves in to control junk wheeler-dealers
FE Report | Thursday, 5 March 2009
The Dhaka Stock Exchange (DSE) will go tough on worst performing shares to put a lid on their abnormal price rise.
The prime bourse has taken a set of measures including exclusion of Z-category companies from the top ten gainers' list, trade halting and delisting.
The decision came in the wake of what DSE says, 'irrational and abnormal' rise in trading of junk shares and smelling some 'foul-play' in the unusual trading of these shares.
Experts termed the move positive for the market as it would save some investors for the time being but not solve the problem completely.
"We'll go tough on junk shares from tomorrow (Thursday) so that the trading of these shares won't make any impact on the overall trading on the main floor," DSE president Rakibur Rahman told reporters after an emergency meeting of the prime bourse Wednesday.
The DSE will exclude the names of the low profile companies from the top ten gainers' list in order to prevent any influence the display puts on investors for chasing after junk shares," he added.
Vested quarters have been trying to catch fish in the troubled waters and unfortunately innocent investors are falling prey, he said adding that there were no reasons for the Z category company prices to go up, as some of them were non-existent.
"Don't go after the junk shares as it'll burn your fingers in the long run," DSE chief appealed to the investors.
The bourse would also begin a process of delisting 'Z' category companies under the existing rules, he added. The prime bourse had, so far, delisted around 35 companies.
"We are also studying the practices of over-the-counter (OTC) market in other countries," he said adding that the bourse would introduce an OTC market for trading of junk shares.
On Februay 16, the DSE had formed a 10-member committee to scrutinise around 90 bottom-placed Z-category shares based on their recent financial performance and identify the ones to be transferred to the OTC market.
The DSE president said, "We have kept trading of the shares of nine "Z" category companies suspended and are conducting enquiries into the unusual rise in their share prices."
Terming the DSE move positive, capital market expert Yawer Sayeed said, "The move taken by the bourse will not solve the problem hundred per cent but will save some investors for the time being."
"The abnormal price rise of the junk shares is a blow to the sound growth of the market," he added.
DSE would hold meetings with market stakeholders on a regular basis from Monday next to bring transparency in the market and also to make it vibrant and buoyant. The bourse would sit with merchant banks on the first day.
Over the last one month, DSE halted trading of nine companies for market enquiry.
The nine companies are Saleh Carpet Mills, Dynamic Textile Industries, M Hossain Garments Washing and Dying, Bionic Sea Food, Mona Food, Rahima Food, Amam Sea Food, Quasem Silk and Bangladesh Electricity Meter Company.
Around 90 companies are currently under Z-category.
The prime bourse has taken a set of measures including exclusion of Z-category companies from the top ten gainers' list, trade halting and delisting.
The decision came in the wake of what DSE says, 'irrational and abnormal' rise in trading of junk shares and smelling some 'foul-play' in the unusual trading of these shares.
Experts termed the move positive for the market as it would save some investors for the time being but not solve the problem completely.
"We'll go tough on junk shares from tomorrow (Thursday) so that the trading of these shares won't make any impact on the overall trading on the main floor," DSE president Rakibur Rahman told reporters after an emergency meeting of the prime bourse Wednesday.
The DSE will exclude the names of the low profile companies from the top ten gainers' list in order to prevent any influence the display puts on investors for chasing after junk shares," he added.
Vested quarters have been trying to catch fish in the troubled waters and unfortunately innocent investors are falling prey, he said adding that there were no reasons for the Z category company prices to go up, as some of them were non-existent.
"Don't go after the junk shares as it'll burn your fingers in the long run," DSE chief appealed to the investors.
The bourse would also begin a process of delisting 'Z' category companies under the existing rules, he added. The prime bourse had, so far, delisted around 35 companies.
"We are also studying the practices of over-the-counter (OTC) market in other countries," he said adding that the bourse would introduce an OTC market for trading of junk shares.
On Februay 16, the DSE had formed a 10-member committee to scrutinise around 90 bottom-placed Z-category shares based on their recent financial performance and identify the ones to be transferred to the OTC market.
The DSE president said, "We have kept trading of the shares of nine "Z" category companies suspended and are conducting enquiries into the unusual rise in their share prices."
Terming the DSE move positive, capital market expert Yawer Sayeed said, "The move taken by the bourse will not solve the problem hundred per cent but will save some investors for the time being."
"The abnormal price rise of the junk shares is a blow to the sound growth of the market," he added.
DSE would hold meetings with market stakeholders on a regular basis from Monday next to bring transparency in the market and also to make it vibrant and buoyant. The bourse would sit with merchant banks on the first day.
Over the last one month, DSE halted trading of nine companies for market enquiry.
The nine companies are Saleh Carpet Mills, Dynamic Textile Industries, M Hossain Garments Washing and Dying, Bionic Sea Food, Mona Food, Rahima Food, Amam Sea Food, Quasem Silk and Bangladesh Electricity Meter Company.
Around 90 companies are currently under Z-category.