The Dhaka Stock Exchange (DSE) yesterday launched two price indices, said to be accurate reflections of market activities.
The indices, DSEX and DS30, were designed by Standard and Poor's (S&P), one of the world's leading credit-rating agencies, based on the free-float methodology used by the world's major indices, said Rakibur Rahman, president of the country's premier bourse.
â€œDSEX will be considered as the benchmark general index of the market as it shows the exact price movement of the listed companies,â€ said Alka Banerjee, S&P's head of equity indices product management.
DSEX has a total of 199 listed companies, which is 93 percent of total market capitalisation, she added.
â€œFor the DSEX, S&P has stressed liquidity and turnover of the listed companies,â€ the S&P official said, adding that the value of the DGEN on January 17, 2008 -- 2,951.91 points -- has been set as the base of the DSEX.
As for DS30, 30 companies based on profitability, market capitalisation and share size were selected, with the companies changed every six months on the basis of performance, Banerjee said.
â€œThe companies included in DS30 will be considered as good shares to invest in.â€
Market capitalisation under free-float methodology is calculated by taking the equity's price and multiplying it by the number of shares readily available in the market.
Instead of using all the shares outstanding as in full-market capitalisation, which DGEN follows, the free-float method excludes locked-in shares held by promoters and governments.
The need for a new index arose following the listing of Grameenphone on November 16, 2009, when the benchmark index of the DSE shot up more than 764 points.
The abnormal jump, due to the index's faulty computation methodology, created confusion in the market.
The DSE was supposed to introduce the new index by April 2012, but the prime bourse took its time to ensure that the index met international standards.
â€œInvestors' confusion over the old flawed index will be removed as we introduced world-class indices for the market,â€ Rahman said.
Ahmed Rashid, senior vice-president of the DSE, said the launch of new international index will attracted foreign investors to Bangladesh.
â€œThe new index will encourage investors to play in the market,â€ Rashid said.
DSEX, the key market tracking index of the DSE, finished its first day at 4,090.47 points, after surging 34.56 points, or 0.85 percent.
DS30 index closed the day at 1,473.01 points, after gaining 12.70 points or 0.87 percent.
â€œBut the DS30 index will be traded in the market when we will introduce derivative market,â€ Rahman said.
â€œWe are working to develop the market for the interest of investors,â€ the DSE president said.