DSE, DBA in quest for ways to stop stocks’ unabated bleeding

The Dhaka Stock Exchange (DSE) held an emergency meeting with the Brokers Association of Bangladesh (DBA) on finding ways to restore investors’ confidence in the country’s ailing capital market.

They also planned to sit with the Bangladesh Securities and Exchange Commission (BSEC) and other policymakers of the government to this end.

DSE Chairman Md Eunusur Rahman, Directors Md Shakil Rizvi, Mohammad Shahjahan, Sharif Anwar Hossain, and acting Managing Director Saifur Rahman Majumdar led the bourse at the meeting held its headquarters in the capital on Monday.

On the other hand, DBA President Richard D’ Rozario, Senior Vice President Md Sajedul Islam, Vice President Md Saifuddin attended the meeting.

DBA, a platform for trading rights entitlement certificate (TREC) holders of the DSE, has been working since 2014 after the demutualisation of the country’s premier bourse in late 2013.

Talking to The Business Post about the meeting outcome, DSE’s Acting Managing Director Saifur Rahman Majumdar said the ongoing volatile stock market situation was the prime discussion in the meeting.

The representatives of the DSE and the DBA would also sit with officials of the securities regulator – BSEC – to discuss various market issues in the next few days, Majumdar added.

“Taking the ongoing domestic and international macroeconomic strains into consideration, we would also sit with other policymakers of the government to find a way to stop the stocks’ bleeding.”

Except for some isolated incidents, Dhaka stocks are continuing to suffer in the current month as severe macroeconomic strains as well as dismal earnings disclosures by the listed companies rattled the investors’ confidence.

The turnover of the country’s premier bourse Dhaka Stock Exchange (DSE) plunged to a four-month low a few days ago. 

The Dhaka bourse witnessed a substantial decrease in participation as the gloomy macroeconomic forecasts and dismal financial progress of the listed companies weakened investors’ confidence on the trading floor, leading the turnover to register a nearly four-month low.

Share prices of most of companies have been stuck at their floor prices on the Dhaka Stock Exchange for a long time.

Dhaka stocks also suffered heavily on Monday.

The DSEX, the key index of the Dhaka bourse, fell below the 6,200 points mark again on the day.

The benchmark index yesterday declined 34.4 points to settle at 6,198 points against 6,232 points in the previous trading session. 

Investors preferred to remain sidelines as their willingness to take long-term positions in equities weakened following the poor financial performance of the major companies, as well as current macroeconomic adversities, said EBL Securities, a stockbroker, in its daily market review.

Moreover, most of the scrips being disregarded at the floor price limited the liquidation opportunities for investors, creating an impediment for investor participation to rebound the bourse. 

The DSE, however, witnessed a slight increase in participation with the total turnover surging by 22.7 per cent yesterday than the tally in the previous session.

Earlier on July 28, the securities regulator reintroduced the floor price for stocks that is still in place, a measure designed to curb market volatility.

Previously, the securities regulator took a similar step in an attempt to limit the free fall of share prices during the Covid-19 outbreak on March 19, 2020, when the DSEX fell below the 3,000-level.

When a floor price is fixed, no company’s shares would be traded below the fixed price. If the share price of a company is trading at the floor price, then that will be the lowest price of that company.

In addition, the BSEC said the upper limit of the circuit breaker and other existing conditions would remain unchanged.

In time of the reintroduction of the floor price, BSEC Chairman Prof Shibli Rubayat-Ul-Islam had told that the commission had been forced to reintroduce the floor price for stocks just to protect the retailers as the country’s stock markets were teeming with retailers.