Floor price removed for 66 listed firms | The Daily Star
12:00 AM, April 08, 2021 / LAST MODIFIED: 02:55 AM, April 08, 2021

Floor price removed for 66 listed firms

  • BSEC imposed the floor price for all stocks on March 19 of 2020 considering the pandemic

  • In the first phase, the restriction was lifted for 66 companies yesterday

 

The Bangladesh Securities and Exchange Commission (BSEC) yesterday lifted the floor price for 66 listed companies as it moved to put an end to its efforts to stop shares from any freefall.

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Analysts, merchant bankers and asset managers welcomed the decision. But retail investors questioned the timing of the removal of the floor price as coronavirus infections are surging across the country.

On March 19 of 2020, the stock market regulator imposed the floor price on all stocks by calculating their average prices from the preceding five days to stop the index from falling amid the pandemic.

The decision was criticised by most analysts and foreign investors. However, the regulator continued with the floor price for one year as many general investors feared the market would fall if the floor price was lifted.

"In the first phase, we have decided to withdraw the floor price for 66 listed companies," said Rezaul Karim, spokesperson of the BSEC.

After analysing the impact, the regulator will decide on whether to do the same for other companies, he added.

The order to scrap the floor price was issued yesterday. In it, the BSEC said that it took the decision in the interest of investors and the development of the capital market. The companies were selected from all the sectors.

A merchant banker said a floor price could not remain in place all the time. It was criticised by foreign investors too.

On the other hand, examples of floor prices are rare in the world, so this cannot be expected anymore, he said.

"As our investors are sensitive, lifting the floor price will be done in several phases. This is a good decision," the merchant banker said.

An asset manager echoed the same, saying that floor prices could not continue year after year.

"The market should be run on the basis of demand and supply. When stock prices fall sharply, some investors will definitely come to invest."

"The BSEC should not show the index higher artificially," he added.

However, stock investor Sogir Ahmed urged the BSEC to consider whether the time was right to remove the floor prices.

"As Covid-19 is spreading fast again, the BSEC should not have lifted the floor price now. It could have been done in a normal time," he added.

The DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), rose 55 points, or 1.05 per cent, to 5,337 yesterday. The index gained for the third consecutive day yesterday.

Turnover, an important indicator of the market, rose 14 per cent to Tk 582 crore yesterday.

At the DSE, stocks of 199 companies advanced, 43 declined, and 102 remained unchanged.

Debutant Index Agro Industries topped the gainers, rising 50 per cent. Securities rules allow a debutant to go up as high as 50 per cent on its first trading day.

Northern Insurance came second in the list, rising 9.97 per cent, followed by Rupali Insurance, Bangladesh National Insurance, Sonar Bangla Insurance, and Islami Insurance.

The CASPI, the general index of the Chattogram Stock Exchange, rose 173 points, or 1.13 per cent, to end the day at 15,434.

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