Only twenty listed companies are dominating the capital market as those companies capture more than 55 per cent of total market capitalisation of the Dhaka Stock Exchange (DSE), officials said.
As a result, the market observes unusual see-saw movement in share prices of many companies.
In terms of paid-up capital, top twenty companies also own around 21 per cent of total paid-up capital calculated for all listed companies.
Analysts said it is not a healthy sign for the market and it indicates the unhealthy presence of a highly concentrated market as the investors remain focused on these companies.
According to information from the DSE, total market capitalisation on the premier bourse stood at Tk 3,355.50 billion as on September 30, 2015 and the top 20 companies accounted for 55.56 per cent of total market capitalisation.
On the other hand, total paid-up capital of 283 listed companies stood at Tk 494.36 billion, whereas the paid-up capital of top 20 companies is Tk 100.16 billion, which is more than 20 per cent of aggregate amount of paid-up capital of all companies.
Among the total number of listed issues, 283 are listed companies, 41 are mutual funds, eight are debentures, 221 are treasury bonds and remaining two are corporate bonds, according to DSE data.
Arif Khan, a commissioner of the securities regulator, said volatility is observed in a market having insufficient depth mainly because of see-saw movement of share prices of large cap companies.
"It's a weakness of the frontier capital market like Bangladesh," said BSEC commissioner Mr. Khan.
He said dominance of large cap companies will be reduced if more companies having large capital are listed with stock exchanges.
"The problem will not be solved over night. The government has given tax incentives for the companies to go public. We hope in future market depth will be increased through the listing of large cap companies," Khan added.
Echoing Mr. Khan, DSE managing director Dr. Swapan Kumar Bala, said the ups and downs of the share prices of large cap companies are reflected in the market.
"Large cap companies having good fundamentals should be listed to end the existing gap. We are also trying to attract such companies along with fixing some other targets," Bala said.
The DSE managing director said the premier bourse is working with the securities regulator to set up a separate board for small cap companies.
Dr. Mahmud Osman Imam, a professor of finance department of Dhaka University, said after introduction of indices-based free floated shares the dominance of large cap companies has reduced comparatively.
"Nevertheless, large cap companies are still dominating the market as the paid-up capitals of the companies, which went public in last three years are small," Mr. Osman said.
He said a target should be fixed to bring the large cap companies such as Robi in the stock exchanges to enhance the depth of the market.    Â
GrameenPhone (GP), the lone listed mobile phone company, dominated the top market cap list that accounted for 13.74 per cent of the DSE's total market cap. GP's total market cap stood at Tk 384.97 billion on September 30, according to statistics of the DSE.
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20 companies create unusual see-saw movement in share prices
Mohammad Mufazzal and Babul Barman | Published: October 14, 2015 00:00:00 | Updated: November 30, 2024 06:01:00
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