DSE plans to take junk shares off market
Dhaka Stock Exchange (DSE) plans to take non-performing Z-category companies off the bourse, in a quick shift from its earlier plan to introduce "over the counter" (OTC) market for junk shares.
But some market analysts explained the plan as a tool to let rogue companies off the hook instead of disciplining them on the capital market.
It means some companies will list on the capital market, make some money and leave the scene, the analysts said.
It will not protect "investor interest”, one of the analysts said.
After a meeting on the Z shares, DSE President Rakibur Rahman said: “No OTC will be introduced soon."
"From now on, we will strictly enforce listing, de-listing and re-listing rules,” he said.
Companies that neither offer dividends nor hold regular annual general meetings or are out of operation fall under Z category.
Of more than 90 companies now listed under Z category, many remain untraced, and some have gone out of operation.
But trade in the Z shares goes on, as many retail investors keep buying into the companies to cash in on rising prices on the market.
A 10-member committee headed by Rakibur Rahman was formed on February 16 to examine legal aspects and find ways to separate the non-performing companies from the trading floor in the wake of an unusual price hike in Z shares.
The committee yesterday decided not to place Z shares on the list of DSE's top gainers anymore, even if some of them end up as top gainers in trade.
“When the prices of Z shares show an unusual rise, it creates instability on the market. Investors are misguided by price movement,” Rahman said.
“There are many companies that are not in operation. They have no offices either, but their shares are traded on the stock exchanges,” he said.
The DSE had earlier halted trading of nine Z-category companies: Rahima Food, Mona Food, Bionic Sea Food, Quasem Silk, M Hossain Garments, Dynamic Textile, Saleh Carpet, Bemco and Desh Garments.
“We have sought explanations from the companies. After getting responses, we will decide on whether to let the companies in,” he said.
Asked why the DSE plans to de-list companies under Z category, Rahman only said: “We are also thinking of a better alternative.”
Commenting on the DSE's decision of de-listing, Salahuddin Ahmed Khan, a professor of finance at Dhaka University, said: “It will encourage companies to come to the market, raise money and get out of the market.
Instead of taking the bad performers off the market, the regulator should take over the companies and declare the companies bankrupt, he suggested.
“If necessary, the Companies Act should be amended."
Meanwhile, Dhaka stocks continued to fall for a third day.
The DSE General Index dropped 16.52 points, or 0.64 percent, to 2551.44. The DSE All Share Price Index also shed 16.13 points, or 0.75 percent, to 2129.68.
A total of 2,61,66,118 shares worth Tk 331.07 crore changed hands on the premier bourse. Of the 259 traded securities, 103 advanced, 153 declined and three remained unchanged.
Chittagong stocks also recorded a fall yesterday. The CSE Selective Categories Index slid 46.65 points, or 0.91 percent, to 5038.93. The CSE All Share Price Index decreased 71.75 points, or 0.9 percent, to 7848.5.
A total of 53,03,805 shares worth Tk 44.78 crore changed hands on the port city bourse. Of the 174 traded scrips, 63 advanced, 106 declined and three remained unchanged.
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