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Management fees of mutual funds to be fixed based on performance: BSEC

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Bangladesh Securities and Exchange Commission (BSEC) is set to introduce a new provision for determining the management fees of mutual funds very soon.

According to the most recent provision, the management fees for managing mutual funds will be determined based on the efficiency and performance of the fund managers or asset management companies.

The process for the introduction of the new provision has almost been completed and it will be published through a gazette notification soon, BSEC Chairman Prof. Shibli Rubayat Ul Islam said while speaking at a roundtable on the capital market on Saturday.

Management fees of MFs to be fixed based on performance

An MF is a financial vehicle that pools assets from shareholders to invest in securities like stocks, bonds, money market instruments, and other assets. It is managed by professional fund managers and its portfolio is structured and maintained to match the investment objectives stated in its prospectus.

The regulatory move to fix management fees based on the performance of the fund managers came in the backdrop of a long-standing demand for the introduction of time-befitting regulations for the MFs.

The poor performance of the fund managers has been blamed for the lack of investor confidence in the mutual funds.

The size of assets under management (AUM) in Bangladesh is very insignificant, compared to India and Pakistan, although the number of asset management companies (AMCs) in Bangladesh is higher than in those two countries.

There are 43 AMCs in India and the size of its AUM is $472 billion while Pakistan has 21 AMCs and the size of its AUM is $6.36 billion as of July 2022.

On the other hand, there are 54 AMCs in Bangladesh and the size of its AUM is $1.60 billion only.

In his speech, BSEC chairman Prof. Shibli Rubayat said the recent growth trend of the MFs is well and they have started disbursing dividends.

“We call the fund managers when they fail to distribute dividends. We ask them for the reasons behind distributing fewer dividends. We also want to know whether the management is weak or not,” he told the roundtable held in a city hotel.

He also said investors having no investment literacy should not invest in mutual funds.

BSEC commissioner said an amendment to the regulations for the mutual funds will bring about a massive change.

“Apart from the management fees, many other changes will be included in the new provision,” said Mr. Rahman, also the chief of the BSEC MF department.

Asked about the insignificant amount of AUM in Bangladesh, he said the situation will improve gradually.

Managing Director of IDLC Investments Md Moniruzzaman said the mutual fund is one of the most popular investment vehicles in developed countries due to investor confidence in such funds and fund managers.

“But Bangladesh is lagging way behind even its neighbor, India, in terms of the size of the mutual fund industry relative to the economy,” he said.

In the USA, the size of the industry is bigger than the economy itself, Moniruzzman said.

Prior, the experts were critical of the regulatory decisions with regard to the extension of the tenures of the closed-end mutual funds and issuance of re-investment units (RIU).

They said the AMCs are benefitted only through RIU as their management fees are increased through the RIU.

The previous commission allowed the AMCs to extend the tenures of the closed-end mutual funds.

The then commission, however, said it took the decision in step with the suggestion of the government.

Currently, there are 36 closed-end mutual funds listed on the stock exchanges.

On the other hand, the number of open-end mutual funds is 84, according to the BSEC data.

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Dhaka Bourse Skyrockets, Achieving 4-Day Gaining Streak

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Dhaka Stock Exchange DSE, Bourse on the last working day of the week, 20th June, ended with a hike in Indices and Turnover from the previous working session. This information is known from DSE sources.

452 crore 94 lakh taka shares were traded on this day. 206 crore 50 lakh more tradings were done in DSE today compared to the previous workday, June 19th, Shares worth Tk 246 crores 44 lakh shares were traded last time, Wednesday

The benchmark DSEX increased 82.74 points or 5,244 The Shariah-based index DSES added 24.78 points or 1,146, and the blue-chip index DS30 gained by 31.34 points or 1,875.

Of the issues traded, 288 advanced, 55 declined and 50 remained unchanged.

Linde Bangladesh Limited ranked top gainer on DSE, the share price increased by Tk 424.10 paisa or 43.04 percent. On this day, the share was last traded at Tk 1409.40 paisa.

Global Heavy Chemicals Limited ranked top loser on the DSE, the share price dropped by Tk 1.20 paisa or 3.00 percent. On this day, the share was last traded at Tk 38.90 paisa.

DSE topped on trade is Asiatic Laboratories Limited 14 crore 63 lakh takas of company shares have been traded.

A total of 45 companies’ shares were traded in the Block on Dhaka Stock Exchange. A total of 1 crore 71 lakh 39 thousand 978 shares of the companies were traded. The financial value of which is 113 crore 38 lakh taka.

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National Tea Sets New Subscription Date for Tk279.7cr Placement Shares

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National Tea Company Limited, a publicly traded entity, has announced new subscription dates for its Tk279.7 crore placement shares. Originally slated for nearly a year ago, the subscription had been postponed by regulatory authorities but is now set to proceed following a recent court directive.

According to the company’s disclosure, the subscription period will run from June 19 to August 19 during banking hours. This follows a letter from the Bangladesh Securities and Exchange Commission (BSEC) instructing the resumption of the capital-raising initiative, in compliance with a High Court order.

The primary objective of issuing these placement shares is to fuel business growth, finance working capital, and repay bank loans. However, due to a funding shortfall, the company has been unable to complete its modernization projects and other initiatives, resulting in decreased turnover caused by declining average sale prices in the auction market for its products.

Following the court’s directive, significant progress has been made in implementing the state-owned company’s plans.

In July of the previous year, Jakir Hossain Sarkar, a minor shareholder with just 10 National Tea shares, filed a writ petition with the High Court opposing the company’s scheme to issue fresh shares as approved by the BSEC, alleging unequal treatment of existing shareholders. The court later upheld the BSEC’s approval. Upon a petition by the market regulator, the Appellate Division’s chamber judge temporarily stayed the High Court’s order.

Shareholders have borne the brunt of these legal battles. After the record date, the price of National Tea shares dropped in anticipation of the increased number of shares, and the issuance of placement shares remained uncertain.

In April last year, National Tea received BSEC approval to raise its paid-up capital by issuing 2.34 crore shares at Tk119.53 each, inclusive of a Tk109.53 premium per share. The distribution plan allocated 1.24 crore shares to the government, Investment Corporation of Bangladesh, and Sadharan Bima Corporation at an average ratio of 4.43 new shares for each existing share. Sponsor-directors were allocated 13.8 lakh shares at a ratio of 3.21:1, and general shareholders were to receive nearly 96 lakh shares at a 2.85:1 ratio.

As of Wednesday, National Tea shares closed at Tk388.60 each on the Dhaka Stock Exchange. Founded in 1978 and listed on the capital market in 1979, National Tea cultivates, manufactures, and sells tea and rubber in the local market. The company’s average annual production is about 52 lakh kg of tea, most of which is sold through the Chattogram auction market.

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Renata Launches First Terbinafine Shipment to the UK

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Renata PLC, a leading pharmaceutical manufacturer in the country, has successfully exported its initial consignment of Terbinafine tablets to the United Kingdom, marking a significant milestone in its export portfolio.

The company’s secretary, Md Jubayer Alam, announced that this shipment expands Renata’s export range to 17 distinct products within the UK market. “We have received an order of approximately 200,000 boxes, valued at £150,000,” he stated.

In local currency terms, this translates to an export value of over Tk2.23 crore.

In a disclosure to stock exchanges on Wednesday, June 19, Renata PLC detailed the dispatch of the first batch of Terbinafine 250 mg tablets to the UK, where the product will be marketed under the brand name Terbimax. The tablets are manufactured at Renata’s MHRA-approved facility in Rajendrapur, Gazipur, and will be distributed by Renata (UK) Limited.

Terbinafine, an allylamine antifungal, is commonly used to treat onychomycosis, a fungal infection of the toenails or fingernails caused by dermatophytes. The global market for Terbinafine was valued at $614 million in 2023. In Bangladesh, this medication is also available under the brand name Terbimax.

Md Jubayer Alam emphasized the strong demand for Terbinafine in the UK. “The market for these products is expanding rapidly. With our entry into this market, we anticipate significant benefits for the company,” he said.

Renata PLC entered the UK market in 2018 through its subsidiary, Renata (UK) Limited. Currently, several products are being commercialized in the UK, supported by agreements with five distribution partners. According to its annual report, Renata (UK) Limited generated a consolidated revenue of Tk7.71 crore in FY23.

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