China bourse to launch index at DSE | The Daily Star
12:00 AM, November 08, 2019 / LAST MODIFIED: 12:41 AM, November 08, 2019

China bourse to launch index at DSE

Bid to attract Chinese investors to the secondary market

The Shenzhen Stock Exchange (SZSE) is going to introduce a new index at the Dhaka Stock Exchange this year to attract Chinese investors to the secondary market of Bangladesh’s premier bourse.   

An SZSE-led Chinese consortium, made up of Shenzhen and Shanghai stock exchanges, became the strategic partner of the DSE in September last year by purchasing the Dhaka bourse’s 25 percent stake.

“The index will be formed by the SZSE in association with the DSE where well-performing stocks will be included,” Liu Fuzhong, a director of the Shenzhen exchange, told reporters yesterday.

Fuzhong was speaking at the inaugural ceremony of the third China-Bangladesh Capital Market Cooperation Seminar in the southeastern Chinese city.

The SZSE and the DSE jointly organised the event at the conference room of the SZSE with V-next, Asian Tiger Capital Partners, and Kingdom Technology as co-organisers.

Fuzhong said they are working with the Dhaka bourse to form the index which would be promoted by the SZSE. “I hope it will be rolled out by the end of the current year.”

The index will give Chinese investors an idea on the performance of the companies listed on the DSE, he said.

“We are working with the DSE to improve the technology of a platform which will reduce information asymmetry on the listed companies. If information asymmetry does not prevail, manipulation reduces.”

Wang Jainjun, president and chief executive officer of the SZSE, said the inaugural meeting explored a unique development path that meets both international standards and Bangladesh’s actual needs.

“Already we have worked together to form the SME board and launch the Bangladesh window on the V-Next platform.”

The Bangladesh window will facilitate Bangladeshi listed companies to explore strategic partnership, seek business collaboration, and diversify business and technology channels in China.

There are more than 16,000 institutional investors from 39 countries registered on the V-Next. More than 1,100 companies have already raised about $5 billion using the platform.

The DSE SME board allows small and medium-sized entrepreneurs to raise funds.

DSE Chairman Prof Abul Hashem said they sought support to bring about the technological advancement at the bourse by way of pooling and sharing knowledge, expertise and best practices from the SZSE.

Shakil Rizvi, president of the DSE Brokers Association, said it is high time to invest in the Bangladesh’s stock market as the price-to-earnings ratio of the exchange is at a very low level and the dividend yield is higher.

“Our market is lucrative now,” he said, calling on Chinese investors to invest in the secondary market of the DSE.

Ifty Islam, group chairman of Asian Tiger Capital Partners, said Bangladesh’s economy is growing fast but the stock market has failed to keep pace with the growth.

“It should be addressed,” he added.

Minhaz Mannan Emon, one of the directors of the Dhaka bourse, said Bangladesh’s stock market is mainly equity-based. So, a lot of new avenues should be opened. “The SZSE can help us in this regard.”

Forty brokers and 50 investors from China and around 70 brokers and investors from Bangladesh were present at a dialogue that took place after the opening ceremony.

By the end of 2018, the SZSE had listed 2,134 listed companies, with a total market capitalisation of $2.4 trillion.

The total capital raised in the equities market in 2018 was $57 billion. There are 4,909 listed bonds, including asset-back securities products, and 517 listed funds, according to the exchange’s website.

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