Bangladesh Securities and Exchange Commission (BSEC) re-introduced the lowest price in the stock market in July this year to prevent continuous price decline. After the implementation of the lowest price, the market calmed down, but now most of the share prices remain unchanged. Market analysts have criticized the lowest price, but a section of investors are relieved. And those who are stuck on the lowest shares are criticized.
Analyzing the data provided by DSE, it can be seen that there is a week of relief in the stock market after the introduction of the lowest price. On the first day after lunch, the main stock market of the country, Dhaka Stock Exchange, saw a big rise in the price index. On that day DSE’s flagship index ‘DSEX’ rose 153 points. Two other indices of the major stock market also rose on that working day. At the same time, out of 382 companies that participated in the transaction on that day, the share prices of 362 companies increased.
Also, after the implementation of the lowest price, the market capitalization of the stock market increased by Tk 21 thousand crores in the first week. The lowest price was initially considered a boon for the stock market as the index jumped and market capitalization increased. However, as the days go by, the discussion and criticism about the matter are increasing. As People say the lowest price is preventing the share price from falling forcefully which result, in the market stakeholders also opposing the lowest price.
Due to the lowest price, most of the shares currently held by investors remain unchanged. A total of 373 companies participated in the trading on the Dhaka Stock Exchange (DSE) on the first working day of the week. Among them, the share prices of 177 companies were unchanged today. The prices of 81 companies have decreased. On the contrary, the price of 115 shares increased.
The market picture was the same last week as well. A total of 160 companies share prices were unchanged on DSE last September 25. The next day, September 26 shares of 173 companies were unchanged. On September 27, the share prices of 174 companies neither increased nor decreased. Share prices of 186 companies were unchanged in the next two working days. According to market watchers, the lowest prices are the main reason why the share prices of most companies remain unchanged.
Many consider such behavior unusual in the market. Most of the companies whose share prices were unchanged today did not fall due to the lowest price. Normally the number of unconverted shares used to be below one hundred. However, due to the lowest price, the share price of most of the companies has remained unchanged recently.
Share market analyst and former teacher of Dhaka University Professor Abu Ahmed thinks that the share market is suffering due to the lowest price. He said that even if an investor urgently needs money, he is unable to sell shares due to the lowest price. Some may want to sell their shares and sell some other shares. But he is unable to sell his shares due to the lowest price. However, a section of our investors is in favor of keeping the lowest price.
Saidur Rahman of Bangladesh Merchant Bankers Association BMBA declined to comment on the lowest price. But he thinks the lowest price is not a good solution for the stock market.
According to Bangladesh Investors Council President Mizar-ur-Rashid Chowdhury, BSEC will not raise the lowest price until the main index (DSEX’) reaches 10,000 points. He told that due to the provision of the lowest price, investors have regained their peace of mind. The market is now stable. If the lowest price is lifted now, investors will again suffer losses.
Mizan-ur-Rashid Chowdhury said we do not see any negative side to the lowest price. Because I can at least have the comfort of buying shares my share price will at least remain stable even if it doesn’t go up. If the lowest price is lifted, the market will collapse within a week, this representative of the investor council also believes.
The BSEC Executive Director and Spokesperson are looking at some positive aspects of the lowest price. Rezaul Karim. He told that the lowest price has been given to instill confidence in investors. The volume of transactions in the market also increased after the lowest price was issued. Where earlier the average transaction was below a thousand crore takas, it has now crossed a thousand crore takas.
In response to the question of whether the BSEC is thinking of something like this, the commission official said that when the lowest price was given earlier, the shares of many companies were not being sold. But this time the shares are being sold even though the price is unchanged. Therefore, the volume of transactions in the market has also increased. Everyday transactions are more than a thousand crore takas.
When the lowest price was first introduced in the stock market, most companies remained unchanged. As a result, BSEC withdrew the lowest price of 66 companies on April 7, 2021. Two months later, the lowest of another 30 companies stuck at the lowest price was withdrawn. The commission withdrew the lowest from the shares of all companies last year 20. The Securities and Exchange Commission (BSEC) again introduced the lowest price in the stock market on June 30 this year in the face of continuous price decline.
