Good cos out, bad cos in due to floor price

A record number of 83 companies, including 13 banks, have been removed from the DSEX index in the annual rebalancing of the index, as they failed to meet the criteria.
The companies include big names, such as ACI Limited, United Power, Bank Asia, Titas Gas, Summit Power, Dutch-Bangla Bank, and RAK Ceramics.
At the same time, 16 new companies have been incorporated into the DSEX index, including some poor performers, such as Meghna Pet Industries, Imam Button, Zaheen Spinning, and Zeal Bangla Sugar Mills.
The changes have taken the total number of firms listed on the DSEX index to 250.
Not only the prime index of the Dhaka Stock Exchange (DSE) but also DS30 index, and DSE SME Growth Index (DSMEX) have undergone a rearrangement of the companies listed on the platforms. The changes will come into effect on Sunday.
The DSE index committee rebalanced the indices following the S&P Dow Jones Index methodology. Indicators such as the volume of free float shares, turnover, and market cap are taken into account while doing the job.
Eligible stocks must have a minimum six-month average daily traded volume worth Tk 1 million until the rebalancing reference date.
In addition, all eligible stocks of the DSE indices must have traded for at least half of normal trading days each month for the three months prior to the rebalancing reference date.
"The companies failed to meet the criteria mainly due to the floor price," said Md. Sajedul Islam, former senior vice president of the DSE Brokers Association of Bangladesh.
"It's not a real picture of the market as the artificial mechanism [Floor Price] has squeezed the market turnover.
"It's a temporary exclusion and the good companies will be included in the list again," Mr Islam said, as the securities regulator has withdrawn the floor price of a majority of the stocks."
After the semi-annual rebalancing, the DSE will add six companies to the DS30 index, a list of blue-chip companies, and exclude six companies, as per the criteria set by S&P Dow Jones Indices.
Six new companies, which will be included into the DS30, are Trust Bank, Marico Bangladesh, Kohinoor Chemicals Company, Green Delta Insurance Company, Bashundhara Paper Mills, and Intraco Refueling Stations.
The companies, which have been dropped from the DS30 index, are IPDC Finance, Orion Pharma, Bangladesh Submarine Cable, Beximco Pharma, City Bank, and Rupali Life Insurance.
Eligible blue chips must have a free-float-adjusted market capitalisation above Tk 100 million and a minimum three-month average daily transactions worth Tk 5 million as of the rebalancing reference date.
The list of the companies on the DSE SME Growth Index (DSMEX) has also been revised, including three companies - MK Footwear, Al-Madina Pharma and Himadri Ltd. No one is excluded.

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