Robi debut buoys stocks to 16-month high
Stocks soared to a 16-month high on the trading debut of mobile phone operator Robi Axiata, buoyed by general investors' buying spree and increased participation from institutional investors.
Robi rose 50 per cent to Tk 15 per share hitting the circuit breaker against a face value of Tk 10 each with less than one per cent or 1.17 lakh shares of the second biggest mobile operator being traded on the first day.
Market analysts said many primary share holders were unwilling to sell their Robi stock on future expectations of higher profits.
Investors are hoping Robi will perform better in the coming days so those who got the shares through the initial public offering (IPO) are holding on to it, said Shahidul Islam, chief executive of VIPB Asset Management Company.
Many of them are waiting for the price to go higher or preferring to just hold on to some telecom shares, he said.
The company raised a fund of Tk 523.7 crore offloading 52.37 crore shares at Tk 10 each whereas the next biggest IPO was that of its competitor GP's -- of Tk 486.1 crore.
Of the Robi's amount, around Tk 136 crore was raised from its employees and the rest from the stock market.
The mobile phone operator's post-IPO earnings per share was Tk 0.22 for the period of January to September. During the period, its profits stood at Tk 116 crore, shows the data of Dhaka Stock Exchange (DSE).
Islam said investment in the stock market depends on future prospects of the company. So investors tend to keep faith on the company even if its profitability track record is poor, said Islam, who manages around Tk 300 crore of mutual funds.
"Investors' expectation is not illogical because such a track record does not mean that it will not be able to make profits," he added.
Meanwhile, Beximco, Bangladesh Thai Aluminium, Bangladesh Submarine Cable Company and Shinepukur Ceramics made gains in leading the DSE, the country's main bourse, to close the highest since August 25, 2019 when the index stood at 5,223.
The DSEX, the benchmark index of the DSE, rose 85 points, or 1.65 per cent to 5,218.36.
Institutional investors have been buying stocks in the past few days, so stocks of companies with good track records are rising alongside the market turnover, said a stock broker.
Turnover, an important indicator of the stock market, rose to Tk 1,405 crore from Tk 1,244 crore on the previous day. Yesterday's turnover was the highest in four months.
Robi's inclusion in the market gave a boost to investors' confidence, the stock broker said, adding that banks were earlier targeting to invest in the stock market by availing a special incentive of Bangladesh Bank.
The central bank announced last February that banks were to form a fund of Tk 200 crore by taking loans from it at a lower rate.
Yesterday, Beximco witnessed the most trade, worth Tk 96.73 crore, followed by IFIC Bank, Beximco Pharmaceuticals, LafargeHolcim Bangladesh and Bangladesh Submarine Cable Company.
Of the total 360 companies to witness trade, 208 advanced, 74 declined and 78 remained unchanged.
Envoy Textile shed the most, losing 4.72 per cent, followed by Islami Insurance Bangladesh, Power Grid Company of Bangladesh, Aman Cotton Fibrous and Peoples Insurance Company.
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