Stocks get a shot in arm
- Square Pharma directors’ share buyback boosts confidence
- PMO drafts action plan for the market
The premier bourse sprang to life yesterday with Square Pharmaceuticals’ sponsor-directors announcement to buy back shares, which can be ideal for all to revive confidence of general shareholders.
Yesterday, Tapan Chowdhury and Samuel S Chowdhury, both sponsor-directors of the drug maker, announced that they will buy total 6 lakh shares of their own company within next 30 working days at market price.
The sponsors must have deemed their company’s share is undervalued, which is why they decided to buy shares off general investors, said a merchant banker preferring anonymity.
“But this move ignited the confidence of investors,” he said, while urging the sponsors of other solid
If sponsors of other fundamentally solid companies like Square Pharma come forward to buy back shares it would have a positive impact on the market sentiment.
“This was an utterly welcoming initiative by the drug makers’ directors,” he added.
Just after the announcement was made on the DSE website, retail investors scrambled to purchase Square Pharma stocks.
Square Pharmaceuticals’ shares closed at Tk 177 yesterday, 6.69 percent higher than the previous day.
At this rate, the two sponsors would have to shell out Tk 11 crore to buy back their shares.
The government can recommend sponsors of listed companies to buys shares of their own companies to revive investors’ confidence, said a stock broker preferring anonymity.
As most of the companies’ shares prices plunged to a four- or five-year low, their price/earnings ratio came down to less than 10.
“Those stocks have become lucrative now,” he added.
The PE ratio of Square Pharmaceuticals is 9.76. Many other blue-chip stocks’ PE ratio ranging from 10 to 12.
When the ratio comes under 12, it is considered safe to invest in these stocks, according to stock market analysts.
“This was an utterly welcoming initiative by the drug makers’ directors,” he added.
Just after the announcement was made on the DSE website, retail investors scrambled to purchase Square Pharma stocks.
Square Pharmaceuticals’ shares closed at Tk 177 yesterday, 6.69 percent higher than the previous day.
At this rate, the two sponsors would have to shell out Tk 11 crore to buy back their shares.
The government can recommend sponsors of listed companies to buys shares of their own companies to revive investors’ confidence, said a stock broker preferring anonymity.
As most of the companies’ shares prices plunged to a four- or five-year low, their price/earnings ratio came down to less than 10.
“Those stocks have become lucrative now,” he added.
The PE ratio of Square Pharmaceuticals is 9.76. Many other blue-chip stocks’ PE ratio ranging from 10 to 12.
When the ratio comes under 12, it is considered safe to invest in these stocks, according to stock market analysts.
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