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Despite Dividends Declarations, DSE-SME stocks dropping since Oct

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SME

DSE: Dhaka Stock Exchange SME board (Small & Medium Enterprises) dropped since the first week of October, driving down the index by 23 percent or 373 points to 1,277.

The decline coincided with the corporate disclosures informing investors of the companies’ remarkable growth in earnings that inspired good dividends.

12 of the 15 companies listed with the board declared 5-15 per cent cash dividend for the year ended in June this year. The disclosures came from early October but they largely failed to bring any positive outcome for stocks.

Except for Yousuf Flour Mills and Star Adhesives, 10 companies have seen their share price fall by 15-42 percent.

Star Adhesives inched up while Yousuf Flour shot up by 110 times to close at Tk 2,884 on Sunday (18 December) The latter jumped 22 times on November 13 alone after the dividend declaration when the circuit breaker was not applicable for the particular listed company.

Market insiders said the persisting downward trend of the main market and frequent policy changes by the Bangladesh Securities and Exchange Commission (BSEC) for the SME board were the reasons behind the bearish trend of the board.

The stock market overall has been going through a tough time due to adversities on the macroeconomic front, said Mostaque Ahmed Sadeque, former president of the DSE Brokers Association of Bangladesh. “The SME market is not an exception.”

Moreover, policy changes by the regulator confused investors, bringing down their participation in the SME market, he added.

The index soared 1042 points or 172 percent in the 10 months through October 2 before the disclosures.

The SME market was introduced to facilitate the growth of small companies that face hurdles while trying to avail bank loans.

Trading on the prime bourse’s SME board started on September 30 last year to open up opportunities for SMEs to raise capital from the stock market. The free-float base index was 1000 points.

Prior, the BSEC did not allow general investors to trade on the SME platform without prior permission considering the high ‘risk’ posed by small-cap firms. An investment of at least Tk 5 million was needed at the time to be a qualified investor (QI) to trade on the SME platform.

Due to low response from investors, stocks sank pushing the index down below 600 points within five months from early February this year.

A complex registration process and the high minimum investment requirement kept investors away.

To overcome the roadblock, the securities regulator on February 17 cut down the investment requirement to Tk 2 million in listed securities on the SME board. The BSEC also removed the mandatory registration requirement, saying registration would complete automatically if an investor met the criterion.

All these developments triggered a turnaround of the index and it soared by 304 percent, or 1689 points, to 2,244 points, the highest, between March 3 and August 11.

Hence, the regulator did not stick to its stance for criticisms by market analysts that easy access had led to the overpricing of SME stocks.

In September, the BSEC revised the minimum investment to Tk 3 million from Tk 2 million for trading on the SME board.

The regulator in its September 21 directive also said that if the minimum criterion was not met, investors would have to leave the board by selling off their securities. But a High Court stay order on November 16 kept the matter hanging.

in the meantime, Yousuf Flour has been flying high abnormally, sounding an alarm. The DSE served a show-cause notice to the company, seeking an explanation.

The company returned a knee-jerk response last week, saying there was no undisclosed price-sensitive information.

Another listed company, Bengal Biscuits declared a 5 percent stock dividend for the year ended in June, but that was rejected by the BSEC on the ground that the regulator’s approval was mandatory before issuing stock dividends in the first three years after the listing.

Apex Weaving and Finishing Mills declared no dividend while Wonderland Toys is yet to make any disclosure.

Bengal Biscuits’ share price dropped 15 percent, Wonderland Toys fell 14 percent and Apex Weaving 1.70 percent since October 2.

Trading of Himadri Ltd has remained suspended since June 29 this year.

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Index Values Experience Rollercoaster Ride Amidst Dull Turnover

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turnover dse index bourse stock indices

Dhaka Stock Exchange DSE, Bourse on the last working day of the week, March 28th, ended with a hike in Indices and drops in Turnover from the previous working session. This information is known from DSE sources.

411 crore 8 lakh taka shares were traded on this day. 127 crore 71 lahks taka less tradings were done in DSE today compared to the previous workday, 27th March, Shares worth Tk 538 crores 79 lakh shares were traded last time, Wednesday.

The benchmark DSEX added 15.64 points or 5,778 The Shariah-based index DSES gained 2.19 points or 1,254, and the blue-chip index DS30 decreased by 0.98 points or 2,011.

Of the issues traded, 221 advanced, 120 declined and 54 remained unchanged.

IPDC Finance Limited ranked top gainer on DSE, the share price increased by Tk 2.30 paisa or 9.79 percent. On this day, the share was last traded at Tk 25.80 paisa.

Mercantile Islami Insurance PLC ranked top loser on the DSE, the share price dropped by Tk 1.30 paisa or 3.90 percent. On this day, the share was last traded at Tk 31.70 paisa.

DSE topped on trade is Central Pharmaceuticals Limited 24 crore 48 lakh takas of company shares have been traded.

A total of 36 companies’ shares were traded in the Block on the Dhaka Stock Exchange, 37lakh 44 thousand 909 shares of the companies were traded. The financial value of which is 20 crore 48 lakh taka.

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Asian Markets Navigate Uncertainty Over Fed Rate Cuts

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Asian Markets

Asian investors proceeded cautiously on Thursday following remarks from a Federal Reserve official suggesting a potential delay or reduction in interest rate cuts. Meanwhile, the yen maintained its gains after briefly reaching a 34-year low the previous day.

As a recent market rally begins to lose steam, traders are reassessing the US monetary policy outlook. Above-forecast inflation and economic data have led some to question whether the central bank can adhere to its projection of three rate cuts this year.

Confidence has been further shaken by recent comments from Fed officials. Atlanta president Raphael Bostic reiterated his stance of expecting only one rate cut this year, warning against hasty actions that could disrupt the market. Governor Lisa Cook also urged caution among decision-makers.

The latest remarks came from Fed governor Christopher Waller, who suggested a reduction in the number of rate cuts or delaying them in response to recent data. Waller noted progress in reducing inflation but expressed concern over slowed or stalled progress in recent months.

His comments preceded the release of the personal consumption expenditures (PCE) index, expected to show a slight increase, on Friday. Despite concerns, all three main indexes on Wall Street saw gains, with the S&P 500 reaching another record high.

In Asia, markets were mixed, with Hong Kong, Shanghai, Sydney, and Wellington posting gains while Singapore, Seoul, Taipei, and Jakarta declined. Tokyo saw a decline of over one percent as the yen stabilized after hitting its weakest level since 1990 against the dollar.

A Bank of Japan official’s comments warning of continued accommodative monetary policy contributed to the yen’s slide. Speculation has arisen regarding potential intervention to support the currency, with Vice Finance Minister Masato Kanda expressing readiness to take necessary measures.

Market analysts anticipate heightened anticipation for Bank of Japan intervention, particularly in light of recent yen fluctuations. Concerns persist over potential market disruptions in the absence of intervention before the weekend.

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Asian Tiger Growth Fund releases Q2 Financials

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Asian Tiger Growth Fund

One of the listed funds, Asian Tiger Sandhani Life Growth Fund discloses its financial reports for the second quarter, (October– December 23).

The company’s earnings per unit (EPU) loss Tk 0.01 paisa in Q2 of the current financial year (October – December 23). EPU was loss Tk 0.17 paisa during the same period last year. NAV per unit at market price was Tk. 10.20 as on December 31, 2023 and cost price was Tk. 11.07 as on December 31, 2023.

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