Twenty-four listed companies will be relegated to 'B' category from the existing 'A', as paper share is not allowed for trading under 'A' category from January .
The Dhaka Stock Exchange disclosed names of the companies on its website yesterday. The firms failing to transform their paper shares into electronic ones by December 31 face this degradation from January 3.
The companies are Azadi Printers, Bangladesh Hotels, Bangladesh Plantation, Bangladesh Services, Eastern Lubricants Blenders, The Engineers, Fine Foods, Gemini Sea Food, Hill Plantation, Himadri, Jute Spinners, Kohinoor Chemical Company (Bangladesh) , Libra Infusions, Monno Ceramic Industries, Monno Jutex Industries, Monno Jute Stafllers, National Tea Company, Orion Infusion, Pharma Aids, Prime Textile Spinning Mills, Renwick Jajneswar & Company (Bangladesh) , Saiham Textile Mills, Sinobangla Industries and SonaliAansh Industries.
Earlier in July this year, the Securities and Exchange Commission announced that paper share will not be allowed for trading under 'A' category from January next, as paper shares create problems in settling those in an electronic trading system.
30 Dec 2009
Investors threaten tougher movement
A group of retail investors took to the streets yesterday demanding withdrawal of loan restrictions on mutual funds and retraction of the announcement of pulling out the funds having no maturity period from the market.
The investors, who have investment in mutual funds, staged demonstration in front of both Dhaka Stock Exchange and Securities and Exchange Commission under the banner of 'Share Market Retail Investors Forum'.
They also met SEC Chairman Ziaul Haque Khondker and placed their demands to him.
They said regulator's intervention led to a sharp decline in the prices of each and every mutual fund during the last few weeks that resulted in huge losses to them.
“If we now bear the losses caused by SEC's move, we would lose everything,” MA Bashar Dablu, the forum's convener, pointed out during the meeting with the SEC chief.
The lifting of SEC restrictions can save their capital, Dablu said.
The SEC chief assured the investors of considering their demands.
The market regulator on December 17 set new criteria for margin loans for mutual funds after about two months of suspension. The regulator said mutual funds must trade in a limited range to qualify for margin loans.
The funds that will trade 7.5 percent higher than their latest NAV (net asset value) will not qualify for the loans. It means if a mutual fund has Tk 100 in NAV per unit and trades only up to Tk 107.50 (7.5 percent higher than NAV), margin loans can be sanctioned for the fund.
Later on December 23, the SEC announced that mutual funds having no maturity period would have to pull out of the market by December 2011.
The decisions took a heavy toll on the mutual fund sector.
The agitated investors told journalists that they would go for tougher movement such as 'hunger strike unto death', if the SEC does not meet their demands.
“We will have no other way but going for hunger strike unto death,” Dablu said.
The investors, who have investment in mutual funds, staged demonstration in front of both Dhaka Stock Exchange and Securities and Exchange Commission under the banner of 'Share Market Retail Investors Forum'.
They also met SEC Chairman Ziaul Haque Khondker and placed their demands to him.
They said regulator's intervention led to a sharp decline in the prices of each and every mutual fund during the last few weeks that resulted in huge losses to them.
“If we now bear the losses caused by SEC's move, we would lose everything,” MA Bashar Dablu, the forum's convener, pointed out during the meeting with the SEC chief.
The lifting of SEC restrictions can save their capital, Dablu said.
The SEC chief assured the investors of considering their demands.
The market regulator on December 17 set new criteria for margin loans for mutual funds after about two months of suspension. The regulator said mutual funds must trade in a limited range to qualify for margin loans.
The funds that will trade 7.5 percent higher than their latest NAV (net asset value) will not qualify for the loans. It means if a mutual fund has Tk 100 in NAV per unit and trades only up to Tk 107.50 (7.5 percent higher than NAV), margin loans can be sanctioned for the fund.
Later on December 23, the SEC announced that mutual funds having no maturity period would have to pull out of the market by December 2011.
The decisions took a heavy toll on the mutual fund sector.
The agitated investors told journalists that they would go for tougher movement such as 'hunger strike unto death', if the SEC does not meet their demands.
“We will have no other way but going for hunger strike unto death,” Dablu said.
DSE upbeat on 2010
Dhaka Stock Exchange, already encouraged by this year's performances, sees a more stronger and stable capital market in the coming year.
“The market performed well with some milestone achievements this year. We saw the much-hyped Grameenphone listing, highest single day turnover, record levels of market capitalisation and key indices, introduction of book building method and many more,” DSE President Rakibur Rahman told journalists yesterday.
“All these successes have added to the investors' confidence. If the trend continues next year and new companies list on the bourses, daily turnover may reach Tk 3,000 crore level by December 2010,” he said.
Rahman also requested the government to increase the flow of good shares to keep the trend by balancing demand and supply.
The government can get more return by offloading shares in such public sectors as hospitality, aviation, port and other services sectors, he said.
Rahman however criticised the government for its intervention in the market this year.
21 Dec 2009
DSE chief critical of regular SEC interference
Regular interference of theSecurities and Exchange Commission (SEC) creates a chance of misinterpretation in the capital market, DSE President Md. Rakibur Rahman said at an investors' awareness programme organised by Trust Bank in the city Monday.
"There should be no obligation for the merchant banks as they know well how to provide margin loans," the DSE president said.
"The government does not need to hold any road show abroad to create funds for infrastructure development. Non-resident Bangladeshis are waiting to invest in the country through the capital market," he added.
On the other hand, Professor Mohammad Musa, a teacher of the United International University said, "Directions relating to the capital market come from different authorities creating impatience among the investors."
The Merchant Banking Division of the Trust Bank organised the programme to create awareness among the investors. Shah A Sarwar, head of the Merchant Banking Division, was also present at the programme.
"There should be no obligation for the merchant banks as they know well how to provide margin loans," the DSE president said.
"The government does not need to hold any road show abroad to create funds for infrastructure development. Non-resident Bangladeshis are waiting to invest in the country through the capital market," he added.
On the other hand, Professor Mohammad Musa, a teacher of the United International University said, "Directions relating to the capital market come from different authorities creating impatience among the investors."
The Merchant Banking Division of the Trust Bank organised the programme to create awareness among the investors. Shah A Sarwar, head of the Merchant Banking Division, was also present at the programme.
Dhaka stocks regain in heavily fluctuating mkt
Dhaka stocks regained in the heavily fluctuating market Monday as investors availed lower prices, after a three-day fall.
The market flipped between gain and loss in early trading as it lost 16 points within first twenty minutes and then recovered well in the next forty-five minutes gaining 42 points, before finishing in the positive zone.
The benchmark index DSE General Index (DGEN) gained 17.25 points or 0.40 per cent to close at 4329.49.
The broader DSE All Shares Price Index (DSI) moved up 15.17 points or 0.42 per cent to 3591.40 while the DSE-20 blue chip index added 5.34 points or 0.21 per cent to finish 2516.92.
"The investors bought shares availing lower prices, sending the market into the positive territory," said Fazlur Rahman, deputy managing director of AB Bank Ltd.
The market declined for the three-day straight sessions with biggest single-day fall in five months, making share prices within the grip of investors, he added.
"Rise in stock prices was needed to boost the investors' confidence which eroded for many reasons," said Fazlur Rahman.
Gainers took a strong lead over the losers as out of 235 issues traded, 155 advanced, 77 declined and three remained unchanged.
Shares worth Tk 6.38 billion --- lowest in three months --- were traded on the day, a decline of 15 per cent over the last session.
Most of the institutional investors remained inactive because of their year-end accounts closure, causing turnover to decline sharply, said a merchant banker.
Grameenphone, the most weighted issue in DSE, edged 0.41 per cent higher to Tk 170.80, reversing form its third consecutive-session losing streak.
The banking sector declined marginally and the non-banking financial institutions (NBFIs) sector advanced 1.92 per cent.
The mutual funds fell further 1.52 per cent while the pharmaceutical sector ended lower marginally. Energy sector gained 0.82 per cent while cement and tannery finished higher.
General and life insurers gained 0.54 per cent and 0.90 per cent respectively.
Beximco Ltd, the flagship company of leading industrial conglomerate Beximco Group, continued to retain top turnover position with shares worth Tk 541.46 million traded.
It was followed by Jamuna Oil, Lanka Bangla Finance, AB Bank, Beximco Pharma, Social Islami Bank Ltd (SIBL), Maksons Spinning, Titas Gas, Meghna Petroleum and Shahjalal Bank.
Alltex, Metro Spinning, GQ Ball Pen, Dacca Dyeing, BIFC, Jamuna Oil, Maksons Spinning, Desh Garments and BD Welding were the leading gainers.
The day's major losers were Alpha Tobacco, Savar Refractories, Gemini Sea Food, Sonali Aansh, ICB AMCL 1st Mutual Fund (MF), ICB 1st NRB MF, Grameen One MF and Grameen Scheme Two MF.
The market flipped between gain and loss in early trading as it lost 16 points within first twenty minutes and then recovered well in the next forty-five minutes gaining 42 points, before finishing in the positive zone.
The benchmark index DSE General Index (DGEN) gained 17.25 points or 0.40 per cent to close at 4329.49.
The broader DSE All Shares Price Index (DSI) moved up 15.17 points or 0.42 per cent to 3591.40 while the DSE-20 blue chip index added 5.34 points or 0.21 per cent to finish 2516.92.
"The investors bought shares availing lower prices, sending the market into the positive territory," said Fazlur Rahman, deputy managing director of AB Bank Ltd.
The market declined for the three-day straight sessions with biggest single-day fall in five months, making share prices within the grip of investors, he added.
"Rise in stock prices was needed to boost the investors' confidence which eroded for many reasons," said Fazlur Rahman.
Gainers took a strong lead over the losers as out of 235 issues traded, 155 advanced, 77 declined and three remained unchanged.
Shares worth Tk 6.38 billion --- lowest in three months --- were traded on the day, a decline of 15 per cent over the last session.
Most of the institutional investors remained inactive because of their year-end accounts closure, causing turnover to decline sharply, said a merchant banker.
Grameenphone, the most weighted issue in DSE, edged 0.41 per cent higher to Tk 170.80, reversing form its third consecutive-session losing streak.
The banking sector declined marginally and the non-banking financial institutions (NBFIs) sector advanced 1.92 per cent.
The mutual funds fell further 1.52 per cent while the pharmaceutical sector ended lower marginally. Energy sector gained 0.82 per cent while cement and tannery finished higher.
General and life insurers gained 0.54 per cent and 0.90 per cent respectively.
Beximco Ltd, the flagship company of leading industrial conglomerate Beximco Group, continued to retain top turnover position with shares worth Tk 541.46 million traded.
It was followed by Jamuna Oil, Lanka Bangla Finance, AB Bank, Beximco Pharma, Social Islami Bank Ltd (SIBL), Maksons Spinning, Titas Gas, Meghna Petroleum and Shahjalal Bank.
Alltex, Metro Spinning, GQ Ball Pen, Dacca Dyeing, BIFC, Jamuna Oil, Maksons Spinning, Desh Garments and BD Welding were the leading gainers.
The day's major losers were Alpha Tobacco, Savar Refractories, Gemini Sea Food, Sonali Aansh, ICB AMCL 1st Mutual Fund (MF), ICB 1st NRB MF, Grameen One MF and Grameen Scheme Two MF.
SEC moves to discipline brokering
The stock market regulator has asked banks, other financial institutions and insurers to form separate subsidiaries to run brokerage and dealer activities.
The subsidiaries must be formed by March 31 next year, according to a decision taken by the Securities and Exchange Commission at a recent meeting.
“Brokerage activities have widened and so an institution may face problems running usual work and brokerage and dealer activities under the same management,” said Ziaul Haque Khondker, chairman of SEC.
Some 200 brokers and dealer are registered with Dhaka Stock Exchange: 32 run by banks, financial institutions and insurance companies.
Of the 32 brokerages, 16 are run by banks, while other financial institutions and insurance companies operate the rest.
The banks which have brokerages are: NCC Bank, Islami Bank, City Bank, Bangladesh Shilpa Bank, Bangladesh Commerce Bank, IFIC Bank, Dhaka Bank, Mutual Trust Bank, National Bank, Pubali Bank, Mercantile Bank, Shahjalal Islami Bank, Bank Asia, Premier Bank and AB Bank.
Some financial institutions already have separate brokerage houses. They are: Phoenix Securities, International Leasing and Financial Services, Equity Partners Securities, IDLC Securities, Green Delta Financial Services, ICB Securities Trading Company, LankaBangla Securities, SES Company and BLI Securities.
The other financial institutions and insurers with brokerage houses are Bangladesh Shilpa Rin Sangstha, Sadharan Bima Corporation, IIDFC and Popular Life Insurance.
In October, Bangladesh Bank directed commercial banks to form separate subsidiaries to operate merchant banking.
A bank will have to take permission from Bangladesh Bank to set up a subsidiary company for merchant banking. The banks -- already in merchant banking -- will have to turn their units into subsidiaries by January.
Lottery Draw of ICB provident & R N Spin
The IPO lottery draws of ICB Employees Provident Mutual Fund One: Scheme One and R N Spinning Mills Limited will be held today (Monday) and December 24 respectively, issue managers of the companies said.
The IPO lottery draw of ICB Employees Provident Mutual Fund One: Scheme One will take place at Bangabandhu International Conference Centre in the city at 10.00 am. The issue manager also said that time and place of distributing refund warrants will be announced in the newspapers.
The IPO subscription of the mutual fund started on November 22 and closed on November 26. The subscription was opened up to December 5 for non-resident Bangladeshis.
ICB Asset Management Company Limited is the issue manager of ICB Employees Provident Mutual Fund One: Scheme One.
On the other hand, the IPO lottery draw of R N Spinning Mills Limited will be held at Bashundhara Convention Centre at 10.00 am and its refund warrants will be distributed from December 27, which will also be announced in the newspapers, the issue manager said.
The subscription of the company started on November 22 and closed on November 26. For Non-resident Bangladeshis the subscription was opened up to December 5.
The IPO lottery draw of ICB Employees Provident Mutual Fund One: Scheme One will take place at Bangabandhu International Conference Centre in the city at 10.00 am. The issue manager also said that time and place of distributing refund warrants will be announced in the newspapers.
The IPO subscription of the mutual fund started on November 22 and closed on November 26. The subscription was opened up to December 5 for non-resident Bangladeshis.
ICB Asset Management Company Limited is the issue manager of ICB Employees Provident Mutual Fund One: Scheme One.
On the other hand, the IPO lottery draw of R N Spinning Mills Limited will be held at Bashundhara Convention Centre at 10.00 am and its refund warrants will be distributed from December 27, which will also be announced in the newspapers, the issue manager said.
The subscription of the company started on November 22 and closed on November 26. For Non-resident Bangladeshis the subscription was opened up to December 5.
Launch of mutual funds hits snag
The launch of new mutual funds worth around Tk 3,000 crore now grapples with uncertainty, as the government has directed the market regulator to go slow on allowing such new funds.
Some 30 proposals for mutual fund formation have been awaiting approval from the Securities and Exchange Commission (SEC) for months, while many are in the pipeline, people close to the issue said.
The finance ministry at a meeting on November 5 decided that the SEC will have to allow mutual funds in phases, saying that too many mutual funds would saturate and heat up the market.
But fund managers said the slow approval process will hinder the growth of the mutual fund segment.
The delay may also force many asset managers to shut their businesses, as 'no approval means no business' for them, they said.
It is the government's 'wrong perception' that many a mutual fund would cast a negative impact on the market, rather these will stabilise the market, creating demand and supply, the fund managers said.
However SEC Chairman Ziaul Haque Khondker told The Daily Star: “We will take initiative on how fast we can give the approvals.”
“The mutual funds are needed to stabilise the market, as these can create both supply and demand,” Moin Al Kashem, managing director of Prime Finance Asset Management Company, said yesterday.
Prime Finance has submitted five mutual fund proposals.
Kashem said: “Some argue that the mutual funds trade far higher than their net asset value (NAV), which shows an overvalued situation. But the situation will change if more mutual funds are allowed.”
The market trend shows the funds now trade 200 percent to 300 percent higher than their NAV, he said, adding that more mutual funds will bring down the ratio near to their NAV.
When the market heads towards volatility due to supply crises, new mutual funds are considered as investment securities, experts said.
On the other hand, they said, when the market witnesses a bearish trend, the funds go into buying mood and thus create a demand for shares in the market.
But in a heated situation, the mutual funds offload shares from their portfolios that cool down the market.
Yawer Sayeed, managing director of AIMS of Bangladesh, another asset management company, said more mutual funds will bring diversity and stabilise the market.
“More importantly, the investors will get a comparatively less risky investment vehicle,” he said.
Some 30 proposals for mutual fund formation have been awaiting approval from the Securities and Exchange Commission (SEC) for months, while many are in the pipeline, people close to the issue said.
The finance ministry at a meeting on November 5 decided that the SEC will have to allow mutual funds in phases, saying that too many mutual funds would saturate and heat up the market.
But fund managers said the slow approval process will hinder the growth of the mutual fund segment.
The delay may also force many asset managers to shut their businesses, as 'no approval means no business' for them, they said.
It is the government's 'wrong perception' that many a mutual fund would cast a negative impact on the market, rather these will stabilise the market, creating demand and supply, the fund managers said.
However SEC Chairman Ziaul Haque Khondker told The Daily Star: “We will take initiative on how fast we can give the approvals.”
“The mutual funds are needed to stabilise the market, as these can create both supply and demand,” Moin Al Kashem, managing director of Prime Finance Asset Management Company, said yesterday.
Prime Finance has submitted five mutual fund proposals.
Kashem said: “Some argue that the mutual funds trade far higher than their net asset value (NAV), which shows an overvalued situation. But the situation will change if more mutual funds are allowed.”
The market trend shows the funds now trade 200 percent to 300 percent higher than their NAV, he said, adding that more mutual funds will bring down the ratio near to their NAV.
When the market heads towards volatility due to supply crises, new mutual funds are considered as investment securities, experts said.
On the other hand, they said, when the market witnesses a bearish trend, the funds go into buying mood and thus create a demand for shares in the market.
But in a heated situation, the mutual funds offload shares from their portfolios that cool down the market.
Yawer Sayeed, managing director of AIMS of Bangladesh, another asset management company, said more mutual funds will bring diversity and stabilise the market.
“More importantly, the investors will get a comparatively less risky investment vehicle,” he said.
Dhaka stocks plunge to steepest single day fall in five months
Dhaka stocks nose-dived Sunday with the benchmark index witnessing steepest single-day fall in five months as anxiety gripped investors over conflicting signals from the authorities.
The main DSE General Index (DGEN) plummeted 81.34 points or 1.85 per cent --- the biggest fall since July 5 --- to close at 4312.24.
The broader DSE All Shares Price Index (DSI) lost 65.80 points or 1.80 per cent to 3576.22 while the DSE-20 blue chip index moved down 37.30 points or 1.46 per cent to 2511.57.
Analysts fell short of describing the fall as a panic sale, but they said the plunge was the compound effect of a series of confusions created by the regulator, the stock exchanges and the government.
"It was an embedded discomfort waiting to explode," Yawer Sayeed, the country's leading stock analyst and the chief executive of Aims Bangladesh fund, said.
The uneasiness became evident minutes after the trading began and continued through rest of the session with 199 issues bleeding red out of the 235 issues traded. Only 34 shares made marginal gain.
Sayeed said the investors have been perplexed by the series of conflicting decisions on securities, new listing, margin rules, mutual funds by the regulators and the government.
"I would say the fall was due to compound effect of the uncertainty being created in the market," said Salahuddin Ahmed Khan, former chief executive of the DSE and a professor of finance at Dhaka University.
"Investors are not sure how they would react to these developments. But I think it would be short-lived. Fundamentals of the market is still sound," he said.
Shares worth Tk 7.48 billion were traded on the day, a decrease of 10.4 per cent over the last session. It was the first time turnover fell below Tk 8.0 billion in three weeks.
A broker said some retail investors reacted negatively to the Securities and Exchange Commission (SEC)'s new criteria on credit facilities for mutual funds.
The SEC Thursday directed merchant banks not to disburse credit to their clients against the mutual funds that trade 7.5 per cent higher than their latest disclosed NAV (net asset value) based on market price.
Some bank-owned brokerage houses also sold off shares en masse to adjust their year-end credit status, in the process dragging the market down, said a banker on condition of anonymity.
Grameenphone, the most weighted issue in DSE, went down for the third consecutive session as it lost 0.58 per cent to close at Tk 170.10 per share.
The banking issues were down by 3.02 per cent as all banks, except state-owned Rupali Bank, ended in the red.
The non-banking financial institutions (NBFIs) lost 2.61 per cent while mutual funds had the highest fall of 4.92 per cent following the latest SEC order on mutual funds
Pharmaceutical sector edged 0.25 per cent lower. Other sectors such as energy, cement, tannery and insurance also declined.
Beximco Ltd, the flag ship company of leading industrial conglomerate Beximco Group, topped the turnover list with shares worth Tk 703.75 million traded.
It was followed by AB Bank, Social Investment Bank Ltd (SIBL), Shahjalal Bank , NCC Bank, Summit Power, Titas Gas, BATBC, Southeast Bank and City Bank.
Pragati Insurance, 1st Prime Finance Mutual Fund, BIFC, 6th ICB, BD Welding, AIMS 1st Mutual Fund, BD Computer, Grameen One Mutual Fund and ICB AMCL 1st Mutual Fund were the leading losers.
The day's major gainers were Berger Paints Ltd, Aftab Automobiles, Reckitt Benckiser, Jamuna Oil, Renata, Mercantile Insurance, IBBLPBOND, Bangas and First ICB.
The main DSE General Index (DGEN) plummeted 81.34 points or 1.85 per cent --- the biggest fall since July 5 --- to close at 4312.24.
The broader DSE All Shares Price Index (DSI) lost 65.80 points or 1.80 per cent to 3576.22 while the DSE-20 blue chip index moved down 37.30 points or 1.46 per cent to 2511.57.
Analysts fell short of describing the fall as a panic sale, but they said the plunge was the compound effect of a series of confusions created by the regulator, the stock exchanges and the government.
"It was an embedded discomfort waiting to explode," Yawer Sayeed, the country's leading stock analyst and the chief executive of Aims Bangladesh fund, said.
The uneasiness became evident minutes after the trading began and continued through rest of the session with 199 issues bleeding red out of the 235 issues traded. Only 34 shares made marginal gain.
Sayeed said the investors have been perplexed by the series of conflicting decisions on securities, new listing, margin rules, mutual funds by the regulators and the government.
"I would say the fall was due to compound effect of the uncertainty being created in the market," said Salahuddin Ahmed Khan, former chief executive of the DSE and a professor of finance at Dhaka University.
"Investors are not sure how they would react to these developments. But I think it would be short-lived. Fundamentals of the market is still sound," he said.
Shares worth Tk 7.48 billion were traded on the day, a decrease of 10.4 per cent over the last session. It was the first time turnover fell below Tk 8.0 billion in three weeks.
A broker said some retail investors reacted negatively to the Securities and Exchange Commission (SEC)'s new criteria on credit facilities for mutual funds.
The SEC Thursday directed merchant banks not to disburse credit to their clients against the mutual funds that trade 7.5 per cent higher than their latest disclosed NAV (net asset value) based on market price.
Some bank-owned brokerage houses also sold off shares en masse to adjust their year-end credit status, in the process dragging the market down, said a banker on condition of anonymity.
Grameenphone, the most weighted issue in DSE, went down for the third consecutive session as it lost 0.58 per cent to close at Tk 170.10 per share.
The banking issues were down by 3.02 per cent as all banks, except state-owned Rupali Bank, ended in the red.
The non-banking financial institutions (NBFIs) lost 2.61 per cent while mutual funds had the highest fall of 4.92 per cent following the latest SEC order on mutual funds
Pharmaceutical sector edged 0.25 per cent lower. Other sectors such as energy, cement, tannery and insurance also declined.
Beximco Ltd, the flag ship company of leading industrial conglomerate Beximco Group, topped the turnover list with shares worth Tk 703.75 million traded.
It was followed by AB Bank, Social Investment Bank Ltd (SIBL), Shahjalal Bank , NCC Bank, Summit Power, Titas Gas, BATBC, Southeast Bank and City Bank.
Pragati Insurance, 1st Prime Finance Mutual Fund, BIFC, 6th ICB, BD Welding, AIMS 1st Mutual Fund, BD Computer, Grameen One Mutual Fund and ICB AMCL 1st Mutual Fund were the leading losers.
The day's major gainers were Berger Paints Ltd, Aftab Automobiles, Reckitt Benckiser, Jamuna Oil, Renata, Mercantile Insurance, IBBLPBOND, Bangas and First ICB.
19 Dec 2009
Finance ministry prepares package formula to rejuvenate Rupali Bank
The Ministry of Finance (MoF) has prepared a package formula to improve the financial health and operational capacity of the largely state-owned Rupali Bank Ltd.
Under the formula, the Bank will be allowed to issue three right shares against one existing shares to increase its paid-up capital while the government itself will issue interest-bearing bondsworth about Tk 5.0 billion against the money the state-owned enterprises (SoEs) and other government organizations owe to the Bank, according to sources.
Besides, around 600 officers will be recruited for Rupali under the package.
"We have finally prepared the package for Rupali to address its longstanding problems relating to capital shortfall, dearth of human resources and non-performing loans,' a top official in the ministry told the FE.
"We at the ministry took a little bit of time since we wanted a lasting solution to the problems Rupali is now facing."
He said the package formula has been finalised last Thursday, which will be placed before Finance Minister AMA Muhith today (Sunday) for approval.
The wants to solve the problems of Rupali in a single package as the problems are longstanding, another top MoF official said.
The major part of the Rupali Bank's classified loan, amounting to Tk. 16.30 billion, as of June 30 last belongs to the public sector entities. Of the classified loans, Tk. 4.97 billion is the principal amount and the rest is accumulated interest, according to the latest estimate of Rupali Bank Ltd.
According to the data, the now-closed Adamjee Jute Mills owes the largest amount of overdue loan, Tk. 7.58 billion, to the Rupali Bank, followed by the Bangladesh Textile Mills Corporation, Tk 1.54 billion, the Bangladesh Agriculture Development Corporation, Tk 1.23 billion, the People's Jute Mills, Tk 1.08 billion, the Bangladesh Jute Mills Corporation, Tk 930 million, the Food Ministry, Tk 484 million, the Crescent Jute Mills, Tk 376 million, the Karim Jute Mills, Tk 312 million, and the Sylhet Pulp and Paper Mills Tk 152 million.
Besides, the Khulna textile Mills owes to the Bank Tk 95.6 million, the Khulna Newsprint Mill Tk 77 million, Bangladesh Aroma Tea Ltd Tk 44.4 million, Bharat Tea Estate Tk 39 million and the National News Publication Tk. 72 million.
Rupali Bank sources said they had to give loans to the SOEs at the insistence of the MoF since the government owns 94 per cent of the Bank's shares.
The MoF at a recent meeting asked the Rupali Bank to submit its total outstanding loans with the SOEs.
The Rupali sought interest-bearing bonds against the outstanding and classified loans of SOEs and other government organisations, amounting to Tk 16.30 billion.
However, the ministry officials said now the principal part of the loan, amounting to about Tk five billion will be provided to the Rupali throughbonds, while the issue of the remaining amount will be settled in the next fiscal year.
Meanwhile, the Bangladesh Bank (BB) gave its opinion favouring the issuance of three right shares against each existing share of Rupali Bank ltd to meet its shortfall in its paid-up capital.
The board of directors of Rupali in last September decided to issue three right shares against each existing share of Rupali Bank ltd to raise its paid-up capital by June 30, 2010, a deadline set by BB for all commercial banks in the country.
Meanwhile, the MoF is planning to offload another considerable portion of share of Rupali through stock exchanges and appoint chief executive officer and other top level posts from the private sector, sources said.
Presently, the government owns 94.55 per cent shake of the Rupali.
As per un-audited quarterly accounts for the 3rd quarter ended on 30th September 2009, Rupali Bank has reported net profit of Tk. 1,109.43 million with EPS of Tk. 88.75 as against Tk. 157.48 million and Tk. 12.60 respectively for the same period of the previous year, according to the information posted on the Dhaka Stock Exchange web site.
Under the formula, the Bank will be allowed to issue three right shares against one existing shares to increase its paid-up capital while the government itself will issue interest-bearing bondsworth about Tk 5.0 billion against the money the state-owned enterprises (SoEs) and other government organizations owe to the Bank, according to sources.
Besides, around 600 officers will be recruited for Rupali under the package.
"We have finally prepared the package for Rupali to address its longstanding problems relating to capital shortfall, dearth of human resources and non-performing loans,' a top official in the ministry told the FE.
"We at the ministry took a little bit of time since we wanted a lasting solution to the problems Rupali is now facing."
He said the package formula has been finalised last Thursday, which will be placed before Finance Minister AMA Muhith today (Sunday) for approval.
The wants to solve the problems of Rupali in a single package as the problems are longstanding, another top MoF official said.
The major part of the Rupali Bank's classified loan, amounting to Tk. 16.30 billion, as of June 30 last belongs to the public sector entities. Of the classified loans, Tk. 4.97 billion is the principal amount and the rest is accumulated interest, according to the latest estimate of Rupali Bank Ltd.
According to the data, the now-closed Adamjee Jute Mills owes the largest amount of overdue loan, Tk. 7.58 billion, to the Rupali Bank, followed by the Bangladesh Textile Mills Corporation, Tk 1.54 billion, the Bangladesh Agriculture Development Corporation, Tk 1.23 billion, the People's Jute Mills, Tk 1.08 billion, the Bangladesh Jute Mills Corporation, Tk 930 million, the Food Ministry, Tk 484 million, the Crescent Jute Mills, Tk 376 million, the Karim Jute Mills, Tk 312 million, and the Sylhet Pulp and Paper Mills Tk 152 million.
Besides, the Khulna textile Mills owes to the Bank Tk 95.6 million, the Khulna Newsprint Mill Tk 77 million, Bangladesh Aroma Tea Ltd Tk 44.4 million, Bharat Tea Estate Tk 39 million and the National News Publication Tk. 72 million.
Rupali Bank sources said they had to give loans to the SOEs at the insistence of the MoF since the government owns 94 per cent of the Bank's shares.
The MoF at a recent meeting asked the Rupali Bank to submit its total outstanding loans with the SOEs.
The Rupali sought interest-bearing bonds against the outstanding and classified loans of SOEs and other government organisations, amounting to Tk 16.30 billion.
However, the ministry officials said now the principal part of the loan, amounting to about Tk five billion will be provided to the Rupali throughbonds, while the issue of the remaining amount will be settled in the next fiscal year.
Meanwhile, the Bangladesh Bank (BB) gave its opinion favouring the issuance of three right shares against each existing share of Rupali Bank ltd to meet its shortfall in its paid-up capital.
The board of directors of Rupali in last September decided to issue three right shares against each existing share of Rupali Bank ltd to raise its paid-up capital by June 30, 2010, a deadline set by BB for all commercial banks in the country.
Meanwhile, the MoF is planning to offload another considerable portion of share of Rupali through stock exchanges and appoint chief executive officer and other top level posts from the private sector, sources said.
Presently, the government owns 94.55 per cent shake of the Rupali.
As per un-audited quarterly accounts for the 3rd quarter ended on 30th September 2009, Rupali Bank has reported net profit of Tk. 1,109.43 million with EPS of Tk. 88.75 as against Tk. 157.48 million and Tk. 12.60 respectively for the same period of the previous year, according to the information posted on the Dhaka Stock Exchange web site.
New criteria for mutual fund loans
The stock market regulator yesterday set new criteria for margin loans for mutual funds after about two months of suspension.
To qualify for margin loans, mutual funds must trade in a limited range, according to the latest decision.
The funds that will trade 7.5 percent higher than their latest NAV (net asset value) will not qualify for the loans.
The new ceiling means if a mutual fund has Tk 100 in NAV per unit and trades only up to Tk 107.50 (7.5 percent higher than NAV), margin loans can be approved for the fund.
The decision will be effective from Sunday.
The Securities and Exchange Commission issued a directive yesterday withdrawing restrictions on margin loans for mutual funds, officials said.
In a circular on October 26, the SEC directed merchant banks, portfolio managers, brokers and dealers to suspend margin loans.
Market experts said only a few mutual funds would now qualify for margin loans under the new criteria.
The current market prices of most mutual funds are much higher than their NAV.
Currently, 19 mutual funds trade on bourses with their combined issued capital of around Tk 500 crore.
To qualify for margin loans, mutual funds must trade in a limited range, according to the latest decision.
The funds that will trade 7.5 percent higher than their latest NAV (net asset value) will not qualify for the loans.
The new ceiling means if a mutual fund has Tk 100 in NAV per unit and trades only up to Tk 107.50 (7.5 percent higher than NAV), margin loans can be approved for the fund.
The decision will be effective from Sunday.
The Securities and Exchange Commission issued a directive yesterday withdrawing restrictions on margin loans for mutual funds, officials said.
In a circular on October 26, the SEC directed merchant banks, portfolio managers, brokers and dealers to suspend margin loans.
Market experts said only a few mutual funds would now qualify for margin loans under the new criteria.
The current market prices of most mutual funds are much higher than their NAV.
Currently, 19 mutual funds trade on bourses with their combined issued capital of around Tk 500 crore.
Passage of bills to bolster insurance sector in next JS session
The Insurance Bill 2009 and the Insurance Regulatory Authority Bill 2009 will be passed in the next session of parliament, said a competent source.
"There are 11 bills pending and out of them these two have already been scrutinised by the standing committee on finance which has placed its report before the House," the source in the parliament said.
The next session will begin on January 4 and on the inaugural day, President Zillur Rahman will deliver his speech.
Finance Minister AMA Muhith on July 9 last placed the two bills before the Jatiyo Sangsad (JS) to pave the way for strengthening the regulatory process ofthe insurance sector.
A total of 62 insurance companies are operating in the country and they need to be regulated under comprehensive laws and guidelines and supervised by a strong regulatory authority, said chairman of the standing committee AHM Mostafa Kamalrecently.
The insurance companies earned Tk 42.5 billion (4,250 crore) in premiums last year (2008) and there is ample scope to expand the business manifold.
The Insurance Bill 2009 has proposed that the paid-up capital for a life insurance company will be Tk 300 million from Tk 75 million and for non-life insurance Tk 400 million from Tk 150 million.
The Insurance Regulatory Authority will consist of a chairman and four members and they will look after the whole sector.
Premiums charged by the companies will be determined by a committee formed by the authorities and it will also investigate any wrongdoings of the companies, the bill says.
If there is any dispute between clients and companies, they can come to the authorities for settlement and interest of the clients will be protected in a transparent manner, it adds.
The proposed Insurance Bill 2009 says that the sector needs to be managed properly and be strengthened by reducing business risks, and local and international insurance laws need to be harmonised considering the socio-economic aspects of the country.
The Insurance Regulatory Authority Bill 2009 says there is an increasing need to regulate one of the largest sectors in the country, harmonise local and international insurance laws considering the socio-economic aspects of the country, and protect the interest of policy-holders and other related beneficiaries.
The insurance bill has proposed that insurance companies should be categorised as 'life' and 'non-life' instead of 'life' and 'general.'
The new Insurance Act will replace the Insurance Act 1938, and after the enactment of the Insurance Regulatory Authority Act, the Insurance Directorate under the finance ministry will be dissolved.
"There are 11 bills pending and out of them these two have already been scrutinised by the standing committee on finance which has placed its report before the House," the source in the parliament said.
The next session will begin on January 4 and on the inaugural day, President Zillur Rahman will deliver his speech.
Finance Minister AMA Muhith on July 9 last placed the two bills before the Jatiyo Sangsad (JS) to pave the way for strengthening the regulatory process ofthe insurance sector.
A total of 62 insurance companies are operating in the country and they need to be regulated under comprehensive laws and guidelines and supervised by a strong regulatory authority, said chairman of the standing committee AHM Mostafa Kamalrecently.
The insurance companies earned Tk 42.5 billion (4,250 crore) in premiums last year (2008) and there is ample scope to expand the business manifold.
The Insurance Bill 2009 has proposed that the paid-up capital for a life insurance company will be Tk 300 million from Tk 75 million and for non-life insurance Tk 400 million from Tk 150 million.
The Insurance Regulatory Authority will consist of a chairman and four members and they will look after the whole sector.
Premiums charged by the companies will be determined by a committee formed by the authorities and it will also investigate any wrongdoings of the companies, the bill says.
If there is any dispute between clients and companies, they can come to the authorities for settlement and interest of the clients will be protected in a transparent manner, it adds.
The proposed Insurance Bill 2009 says that the sector needs to be managed properly and be strengthened by reducing business risks, and local and international insurance laws need to be harmonised considering the socio-economic aspects of the country.
The Insurance Regulatory Authority Bill 2009 says there is an increasing need to regulate one of the largest sectors in the country, harmonise local and international insurance laws considering the socio-economic aspects of the country, and protect the interest of policy-holders and other related beneficiaries.
The insurance bill has proposed that insurance companies should be categorised as 'life' and 'non-life' instead of 'life' and 'general.'
The new Insurance Act will replace the Insurance Act 1938, and after the enactment of the Insurance Regulatory Authority Act, the Insurance Directorate under the finance ministry will be dissolved.
DSE updates PE ratios of 240 companies
A total of 185 out of 240 listed issues, excludingmutual funds, non-demated and z-category shares, have price-earning (PE) ratio between 1.0 and 75, according to the DhakaStock Exchange (DSE) update on PE ratios.
However, the DSE updated the PE ratio of only 25 companies on the basis of their latest audited reports and the rest on the latest un-audited reports.
Most of banks and leasing companies have PE ratios below 75.
"As per directive of the Securities and Exchange Commission (SEC), the companies, the PE ratios of which are 75 or below, are eligible for loan facilities," Dhaka Stock Exchange (DSE) Chief Executive Officer Satipati Moitra told the FE.
"The rules and regulations on loan facilities vary from bank to bank. So a bank can choose any PE ratio below 75 in case of providing loan facilities," he added.
However, several merchant banks said they would rely only on audited reports in case of providing loan facilities.
"We'll not accept the PE ratios based on un-audited reports for providing any margin loan facilities and we've already sent our opinion to the SEC," Sheikh Mortuza Ahmed, Executive Vice President of Prime Bank Limited, told the FE.
The DSE updated the PE ratios based on different quarterly reports as of December 17. The PE ratios of the remaining companies will be calculated after having the clarifications from the companies, a DSE official said.
The DSE got the audited reports only from those firms, which ended their fiscal year on June 30, he added.
The move on PE ratio has been taken after a recent order of the SEC asking banks not to lend to any investor, who will purchase shares of a company, the PE ratio of which crosses 75.
The companies, the PE ratios of which are 75 or below as per audited reports, are: ICB (27.86), Aftab Auto (58.03 under continuous operation and 13.57 when extraordinary profit included), Gemini Sea Food (52.15), Meghna Condensed Milk (57.64), Fine Foods Limited (48.81), Padma Oil (14.39), Power Grid Company Limited (17.04), Sonali Ash Industries (30.69), Saiham Textile (26.24), Mithun Knitting (29.77), Prime Textile (29.65), Metro Spinning (16.23), Kohinoor Chemicals (31.96), Orion Industries (50.51), Marico Bangladesh (26.47), Samorita Hospital (30.42), Daffodil Computers (73.86), The Engineers Limited (1.35) and Savar Refractories Limited (66.38).
The number of companies having PE ratios above 75 based on their audited reports, is 05. They are Bangas Limited (146.33), Bangladesh Plantation (94.02), Hill Plantation (82.24), Imam Button (81.09) and Eastern Lubricant (121.04).
On the other hand, Meghna Pet Industries, Tallu Spinning, Altex Industries, Northern Jute, and Samata Leather Complex have negative PE ratios based on their audited reports.
The companies, the PE ratios of which are above 75 based on un-audited reports, include Bangladesh Industrial Finance Corporation, National Polymer, National Tubes, Rahima Food, Legacy Footwear, Monno Ceramic, Monno Jutex, Standard Ceramic, United Insurance, Purabi General Insurance, BSC, Modern Dyeing, Desh Garments, Dacca Dyeing, Ambee Pharma, Beximco Synthetics, Summit Alliance and In Tech Online Limited.
Mutual funds, non-demated shares, poor performing Z-category companies, newly-listed firms and companies, share status of which has been downgraded or upgraded, have not come under the purview of the recent SEC order.
However, the DSE updated the PE ratio of only 25 companies on the basis of their latest audited reports and the rest on the latest un-audited reports.
Most of banks and leasing companies have PE ratios below 75.
"As per directive of the Securities and Exchange Commission (SEC), the companies, the PE ratios of which are 75 or below, are eligible for loan facilities," Dhaka Stock Exchange (DSE) Chief Executive Officer Satipati Moitra told the FE.
"The rules and regulations on loan facilities vary from bank to bank. So a bank can choose any PE ratio below 75 in case of providing loan facilities," he added.
However, several merchant banks said they would rely only on audited reports in case of providing loan facilities.
"We'll not accept the PE ratios based on un-audited reports for providing any margin loan facilities and we've already sent our opinion to the SEC," Sheikh Mortuza Ahmed, Executive Vice President of Prime Bank Limited, told the FE.
The DSE updated the PE ratios based on different quarterly reports as of December 17. The PE ratios of the remaining companies will be calculated after having the clarifications from the companies, a DSE official said.
The DSE got the audited reports only from those firms, which ended their fiscal year on June 30, he added.
The move on PE ratio has been taken after a recent order of the SEC asking banks not to lend to any investor, who will purchase shares of a company, the PE ratio of which crosses 75.
The companies, the PE ratios of which are 75 or below as per audited reports, are: ICB (27.86), Aftab Auto (58.03 under continuous operation and 13.57 when extraordinary profit included), Gemini Sea Food (52.15), Meghna Condensed Milk (57.64), Fine Foods Limited (48.81), Padma Oil (14.39), Power Grid Company Limited (17.04), Sonali Ash Industries (30.69), Saiham Textile (26.24), Mithun Knitting (29.77), Prime Textile (29.65), Metro Spinning (16.23), Kohinoor Chemicals (31.96), Orion Industries (50.51), Marico Bangladesh (26.47), Samorita Hospital (30.42), Daffodil Computers (73.86), The Engineers Limited (1.35) and Savar Refractories Limited (66.38).
The number of companies having PE ratios above 75 based on their audited reports, is 05. They are Bangas Limited (146.33), Bangladesh Plantation (94.02), Hill Plantation (82.24), Imam Button (81.09) and Eastern Lubricant (121.04).
On the other hand, Meghna Pet Industries, Tallu Spinning, Altex Industries, Northern Jute, and Samata Leather Complex have negative PE ratios based on their audited reports.
The companies, the PE ratios of which are above 75 based on un-audited reports, include Bangladesh Industrial Finance Corporation, National Polymer, National Tubes, Rahima Food, Legacy Footwear, Monno Ceramic, Monno Jutex, Standard Ceramic, United Insurance, Purabi General Insurance, BSC, Modern Dyeing, Desh Garments, Dacca Dyeing, Ambee Pharma, Beximco Synthetics, Summit Alliance and In Tech Online Limited.
Mutual funds, non-demated shares, poor performing Z-category companies, newly-listed firms and companies, share status of which has been downgraded or upgraded, have not come under the purview of the recent SEC order.
17 Dec 2009
Marico Bangladesh earns Tk 680m net profit
Marico Bangladesh Ltd has reported profit of Tk 680 million (68 crore) before tax during the fiscal 2008-09. The profit is 35 per cent more than that of the last year.
The company sold products of Tk 4.05 billion (405 crore) during the fiscal 2008-09 that is 53 per cent more compared to that of the last fiscal. The profit of the company amounted Tk 470 million (47 crore) after tax.
The board of directors of the company recommended 25 per cent cash dividend, declared December 13, 2009 the record date and decided to hold the next annual general meeting (AGM) on January 19, said a press release of Marico Bangladesh L
The company sold products of Tk 4.05 billion (405 crore) during the fiscal 2008-09 that is 53 per cent more compared to that of the last fiscal. The profit of the company amounted Tk 470 million (47 crore) after tax.
The board of directors of the company recommended 25 per cent cash dividend, declared December 13, 2009 the record date and decided to hold the next annual general meeting (AGM) on January 19, said a press release of Marico Bangladesh L
15 Dec 2009
Janata submits Tk 1,000cr IPO plan
Janata Bank has submitted a Tk 1,000 crore IPO plan to the market regulator for approval.
The state-owned commercial bank put forward its IPO (initial public offering) prospectus to the Securities and Exchange Commission (SEC) early this week, said a senior SEC official.
The bank's IPO, if approved, will be the largest public offering that will surpass the Grameenphone's offering of Tk 972 crore including IPO and pre-IPO.
The bank will raise the amount through floating one crore ordinary shares of Tk 100 each at an offer price of Tk 1,000 that shows Tk 900 as premium per share.
With the existing paid-up capital of Tk 375 crore, the bank has sought the premium considering its high net worth fundamentals such as asset value, earnings and brand value.
As of December 31 of 2008, the bank's net asset value per share was Tk 350 and earning per share was Tk 121.
ICB Capital Management Ltd is the issue manager of Janata Bank IPO.
Janata, the second biggest commercial bank after Sonali, will be the second state bank to be listed on the stock exchanges with Rupali Bank being the first.
The bank was turned into a public limited company in November 2007 in a bid to bring more efficiency and transparency in its activities.
The two other state-owned commercial banks -- Sonali and Agrani -- also became public limited companies at the same time with the same purpose.
Janata, which was nationalised in line with Bangladesh Bank (Nationalisation) Order 1972 immediately after the country's independence in 1971, has now 849 branches across the country.
However, it may not be so easy for Janata Bank to get SEC nod, as the market regulator is now stuck in indecision over such approval following a government decision on IPO floatation.
The finance ministry at a meeting on November 5 decided that from now a company will have to go for IPO with minimum shares equivalent to 40 percent of its paid-up capital. The SEC has also been directed to go by the new decision.
The restriction has already pushed at least four companies' IPOs into uncertainty with Janata Bank being the latest.
RAK Ceramics, Beacon Pharmaceuticals, LSI Industries and Industrial and Infrastructure Development Finance Company Limited (IIDFC) have been awaiting a nod from the regulator for months after submitting their IPO prospectuses.
SINOBANGLA
The company has informed that the Board of Directors of the company has decided to apply to CDBL for dematerialization of shares of the company.
BANGLAPRO
The Board of Directors has recommended cash dividend @ 6% (for public shareholders other than sponsors) for the year 2008-2009. Date of AGM: 31.12.09, Time: 12:30 PM, Venue: 82/8, North Jatrabari, Dhaka. Book closure: 27.12.09 to 31.12.09.
14 Dec 2009
Salman new president of listed cos' assoc
Mr. Salman F Rahman, Vice Chairman of Beximco Group and Mr. AKM Azizur Rahman, Managing Director of Sonargaon Textiles Limited have been elected as the president and vice president respectively of the Bangladesh Association of Publicly Listed Companies for the period of 2010-2011.
The BAPLC is the top body of the companies listed with the stock exchanges of Bangladesh.
The new president and vice president were elected by a newly elected Executive Committee of the association Sunday, said a statement issued by BAPLC.
Earlier, the election Board of BAPLC declared 19 candidates representing the member companies in the association elected as members of the Executive Committee for the period of 2010-2011, under Rule 12 of the BAPLC Election Rules, 2002.
The members of the executive committee include-- Mr. Syed Manzur Elahi, Chairman, Apex Adelchi Footwear Ltd., Mr. Zafar Ahmed, Managing Director, Apex Foods Ltd. , B.D. Mukherjee, Managing Director Bangladesh Plantation Ltd, Mr. Samsul Alam, Chairman, Confidence Cement, Mr. Syed Mukarram Ali, Director, Delta Life Insurance Co Ltd, Ms Rokeya Quader, Chairperson, Desh Garments Ltd, Mr. Nasir A Choudhury, Managing Director, Green Delta Ins. Co Ltd., Mr. Iftekhar Uddin, Executive Director, Kay & Que (Bangladesh)Ltd, Mr. Syed Tareque Md. Ali, Managing Director, Modern Industries(BD)Ltd, Mr. Anis A Khan, Managing Director, Mutual Trust Bank Ltd, Mr. Mahboob Uddin Mahmood, Managing Director, Northern Jute Mfg. Co.Ltd, Mr. Mubarak Ali, Managing Director, Olympic Industries Ltd, Mr.A.K.M.Rafiqul Islam FCA, Managing Director, Pragati Insurance Ltd., Mr. M. A. Awal, Chairman & Managing Director, Prime Textile Spinning Mills Ltd, Dr. A.B.M. Haroon, Managing Director, Samorita Hospital Ltd, Mr. Samson H. Chowdhury, Chairman, Square Pharmaceuticals Ltd and Mr. M Shamsur Rahman, Managing Director, Style Craft Ltd.
The BAPLC is the top body of the companies listed with the stock exchanges of Bangladesh.
The new president and vice president were elected by a newly elected Executive Committee of the association Sunday, said a statement issued by BAPLC.
Earlier, the election Board of BAPLC declared 19 candidates representing the member companies in the association elected as members of the Executive Committee for the period of 2010-2011, under Rule 12 of the BAPLC Election Rules, 2002.
The members of the executive committee include-- Mr. Syed Manzur Elahi, Chairman, Apex Adelchi Footwear Ltd., Mr. Zafar Ahmed, Managing Director, Apex Foods Ltd. , B.D. Mukherjee, Managing Director Bangladesh Plantation Ltd, Mr. Samsul Alam, Chairman, Confidence Cement, Mr. Syed Mukarram Ali, Director, Delta Life Insurance Co Ltd, Ms Rokeya Quader, Chairperson, Desh Garments Ltd, Mr. Nasir A Choudhury, Managing Director, Green Delta Ins. Co Ltd., Mr. Iftekhar Uddin, Executive Director, Kay & Que (Bangladesh)Ltd, Mr. Syed Tareque Md. Ali, Managing Director, Modern Industries(BD)Ltd, Mr. Anis A Khan, Managing Director, Mutual Trust Bank Ltd, Mr. Mahboob Uddin Mahmood, Managing Director, Northern Jute Mfg. Co.Ltd, Mr. Mubarak Ali, Managing Director, Olympic Industries Ltd, Mr.A.K.M.Rafiqul Islam FCA, Managing Director, Pragati Insurance Ltd., Mr. M. A. Awal, Chairman & Managing Director, Prime Textile Spinning Mills Ltd, Dr. A.B.M. Haroon, Managing Director, Samorita Hospital Ltd, Mr. Samson H. Chowdhury, Chairman, Square Pharmaceuticals Ltd and Mr. M Shamsur Rahman, Managing Director, Style Craft Ltd.
Melee over Golden Son refund warrant distribution
The unsuccessful applicants, who applied for the initial public offering (IPO) of Golden Son Limited, staged a demonstration Monday in front of the Securities and Exchange Commission (SEC) demanding action against the company for its irresponsibility during distribution of refund warrants on the day.
However, the SEC assured the angry applicants of immediate action against the company, if it fails to come up with a proper explanation on the melee during distribution of the refund warrants, SEC sources said.
"We've sent a letter to the company asking it to explain why and what happened during distribution of the refund warrants Monday. If the company fails to come up with a satisfactory explanation by Tuesday (Today) and any proper initiative is not taken to ensure fair redistribution of refund warrants, the SEC will go for immediate action against the company and its issue manager," SEC Executive Director ATM Tariquzzaman told the FE.
According to unsuccessful applicants, the company was supposed to hand over the refund warrants at 10 am Monday from the Mahbub Mansion at Shahjahanpur in the city. But at that time the applicants found there none of the company except a bundle of refund warrants. Then a competition started among the applicants for collecting their refund warrants leading to a melee. So most of them were unable to collect refund warrants. At one stage about five hundred applicants got furious and went to the SEC, where they staged the demonstration at around 12 pm.
Then they met the SEC chairman and sought his help. The SEC chairman assured them of taking an initiative for ensuring fair redistribution of the refund warrants.
When contacted, the company could not present any explanation on the incident.
The company launched its IPO on November 8 and closed the offer on November 12. For non-resident Bangladeshis, the last date for application was November 21. The IPO lottery draw was held on December 10. Its issue manager is the ICB Capital Management
However, the SEC assured the angry applicants of immediate action against the company, if it fails to come up with a proper explanation on the melee during distribution of the refund warrants, SEC sources said.
"We've sent a letter to the company asking it to explain why and what happened during distribution of the refund warrants Monday. If the company fails to come up with a satisfactory explanation by Tuesday (Today) and any proper initiative is not taken to ensure fair redistribution of refund warrants, the SEC will go for immediate action against the company and its issue manager," SEC Executive Director ATM Tariquzzaman told the FE.
According to unsuccessful applicants, the company was supposed to hand over the refund warrants at 10 am Monday from the Mahbub Mansion at Shahjahanpur in the city. But at that time the applicants found there none of the company except a bundle of refund warrants. Then a competition started among the applicants for collecting their refund warrants leading to a melee. So most of them were unable to collect refund warrants. At one stage about five hundred applicants got furious and went to the SEC, where they staged the demonstration at around 12 pm.
Then they met the SEC chairman and sought his help. The SEC chairman assured them of taking an initiative for ensuring fair redistribution of the refund warrants.
When contacted, the company could not present any explanation on the incident.
The company launched its IPO on November 8 and closed the offer on November 12. For non-resident Bangladeshis, the last date for application was November 21. The IPO lottery draw was held on December 10. Its issue manager is the ICB Capital Management
Bourses term govt decisions on IPO, MF anti-market
Both the local bourses termed some recent government decisions relating to IPO and mutual funds 'anti-market' saying that it would discourage the new companies aiming to list with the stock exchanges.
At a meeting on November 5 last the finance ministry took decisions that a public limited company must offload shares accounting for minimum 40 per cent of its paid-up capital through initial public offering (IPO) and the securities regulator allow more mutual funds in the market in phases.
"The decisions are anti-market," said Rakibur Rahman, president of the Dhaka Stock Exchange, at a press conference after a joint meeting of the DSE and the Chittagong Stock Exchange (CSE) on the day.
"We don't agree with your decisions, which will just discourage other companies planning to list with the bourses and lead to depletion of the supply of fresh shares into the market, when the demand for new issues is rising day by day," Mr Rahman said.
"The stock market is very sensitive," he said adding that the decision should have been taken in consultation with the stakeholders for betterment of the market.
The decision relating to IPO floatation also contradicts the book-building method, that says a company will go public with shares equivalent to 10 per cent of its paid-up capital, or Tk 300 million, whichever is higher, he said.
"Let the book-building method take its own course. Please, don't disturb the regulations," he said.
He recommended that a public limited company having a paid-up capital below Tk 5.0 billion offload minimum 25 per cent shares and a company with paid-up capital above Tk 5.0 billion offload 15 per cent shares.
"There should be pre-IPO placement. Imposition of the lock-in period might be one year," he said.
"Grameenphone offered only 10 per cent of its paid-up capital through its IPO. If it offered shares accounting for 40 per cent of its paid-up capital, the IPO might have been under-subscribed. So, a market always requires a gap between the demand and the supply for execution of buying and selling," he added.
On uniform face value and market lot, the DSE president said, "We are not against this decision, but it should be decided after sitting with the Securities and Exchange Commission (SEC), the DSE and the CSE."
He was also critical of the slow SEC process of giving approval to mutual funds.
The finance ministry advised the SEC to allow mutual funds in the market in phases to see the impact of their entry into the market.
"We are seriously against it as mutual funds managed by professionals help stabilise the market," the DSE boss said.
But the mutual fund rules say the SEC will have to give the nod for registration of a mutual fund within 30 days, he pointed out.
About Direct Listing Regulations, he said the joint committee of the bourses would discuss the issue further.
However, the DSE and CSE hailed the finance ministry decision on setting up a separate bench for quick disposal of the cases remaining pending with the High Court for years.
"Amendment to some securities rules to bolster the market and make it vibrant is a time-befitting decision," said the DSE president.
CSE President Fakhruddin Ali Ahmed, DSE senior vice president Saiful Islam and other high officials of the bourses were present at the press conference.
At a meeting on November 5 last the finance ministry took decisions that a public limited company must offload shares accounting for minimum 40 per cent of its paid-up capital through initial public offering (IPO) and the securities regulator allow more mutual funds in the market in phases.
"The decisions are anti-market," said Rakibur Rahman, president of the Dhaka Stock Exchange, at a press conference after a joint meeting of the DSE and the Chittagong Stock Exchange (CSE) on the day.
"We don't agree with your decisions, which will just discourage other companies planning to list with the bourses and lead to depletion of the supply of fresh shares into the market, when the demand for new issues is rising day by day," Mr Rahman said.
"The stock market is very sensitive," he said adding that the decision should have been taken in consultation with the stakeholders for betterment of the market.
The decision relating to IPO floatation also contradicts the book-building method, that says a company will go public with shares equivalent to 10 per cent of its paid-up capital, or Tk 300 million, whichever is higher, he said.
"Let the book-building method take its own course. Please, don't disturb the regulations," he said.
He recommended that a public limited company having a paid-up capital below Tk 5.0 billion offload minimum 25 per cent shares and a company with paid-up capital above Tk 5.0 billion offload 15 per cent shares.
"There should be pre-IPO placement. Imposition of the lock-in period might be one year," he said.
"Grameenphone offered only 10 per cent of its paid-up capital through its IPO. If it offered shares accounting for 40 per cent of its paid-up capital, the IPO might have been under-subscribed. So, a market always requires a gap between the demand and the supply for execution of buying and selling," he added.
On uniform face value and market lot, the DSE president said, "We are not against this decision, but it should be decided after sitting with the Securities and Exchange Commission (SEC), the DSE and the CSE."
He was also critical of the slow SEC process of giving approval to mutual funds.
The finance ministry advised the SEC to allow mutual funds in the market in phases to see the impact of their entry into the market.
"We are seriously against it as mutual funds managed by professionals help stabilise the market," the DSE boss said.
But the mutual fund rules say the SEC will have to give the nod for registration of a mutual fund within 30 days, he pointed out.
About Direct Listing Regulations, he said the joint committee of the bourses would discuss the issue further.
However, the DSE and CSE hailed the finance ministry decision on setting up a separate bench for quick disposal of the cases remaining pending with the High Court for years.
"Amendment to some securities rules to bolster the market and make it vibrant is a time-befitting decision," said the DSE president.
CSE President Fakhruddin Ali Ahmed, DSE senior vice president Saiful Islam and other high officials of the bourses were present at the press conference.
13 Dec 2009
Provati insurance
IPO lottery of PICL will be held on Tuesday, 15th December, 2009 at 10.30 am in Banghabandhu International Conference Center, Sher-E-Bangla Nagar, Agargaon, Dhaka-1207.
Metro Spinning plans for 'slab yarn' production
Metro Spinning, a concern of Maksons Group, plans to import 20 slab yarn machines from India in two phases to produce specialised yarn, as part of the company's effort to diversify products.
The equipment that makes specialised yarn for both knit and woven fabrics will be installed at a cost of $2.30 lakh (Tk 1.58 crore).
Metro Spinning made the plan last week, according to a web posting on the Dhaka Stock Exchange website.
The company that listed on the market in 2002 said it would be able to make an approximate 20 percent increase in turnover, thanks to new machinery that also increases profitability.
For the year to June 30, the company made net profit of Tk 2.60 crore with earnings per share of Tk 3.77.
The company also decided either to acquire a ready 100 percent export-oriented composite textile unit or to set up a new one with bank loan, which is subject to approval from shareholders at the 14th AGM set for December 28.
This will also help increase turnover and profitability of Metro Spinning, which produces around 45 lakh kilograms of yarn a year, according to the web posting.
The company also decided to use a Tk 31.05 crore fund raised through rights shares for loan payback, instead of setting up a new export-oriented composite textile unit.
Metro Spinning has two units, one for the local market and the other for export markets, where carded and combed knit cotton yarn of various counts is produced.
Janata Bank submits prospectus to SEC
Janata Bank submitted its prospectus to the Securities and Exchange Commission (SEC) Sunday, Janata’s issue manager said.
Janata Bank, subject to the approval of SEC, will offer 10 million shares of Tk 100 each for subscription under its IPO placement in the stock market which is 16.28 percent of the pre-IPO paid-up capital worth Tk 4.84 billion.
The ministry of finance last month decided that the companies intending to raise capital by offloading shares must go for IPO with shares equivalent to atleast 40 per cent of the paid-up capital.
But this decision has not been incorporated in the SEC regulation yet.
"We submitted our prospectus according to the government plan and after obtaining approval of finance ministry. The SEC has the authority to approve or reject our prospectus," Belal Hossain, a senior consultant of Janata Bank told the FE.
"The commission will decide which regulation will be applicable for the approval of IPO submitted by Janata Bank," an official of the SEC told FE.
Janata Bank, subject to the approval of SEC will raise Tk 10 billion by offloading the 10 million shares with a face value of Tk 100 each. The offer price of a share will be Tk 1,000 including a premium of Tk 900, subject to the approval of SEC.
Janata Bank, subject to the approval of SEC, will offer 10 million shares of Tk 100 each for subscription under its IPO placement in the stock market which is 16.28 percent of the pre-IPO paid-up capital worth Tk 4.84 billion.
The ministry of finance last month decided that the companies intending to raise capital by offloading shares must go for IPO with shares equivalent to atleast 40 per cent of the paid-up capital.
But this decision has not been incorporated in the SEC regulation yet.
"We submitted our prospectus according to the government plan and after obtaining approval of finance ministry. The SEC has the authority to approve or reject our prospectus," Belal Hossain, a senior consultant of Janata Bank told the FE.
"The commission will decide which regulation will be applicable for the approval of IPO submitted by Janata Bank," an official of the SEC told FE.
Janata Bank, subject to the approval of SEC will raise Tk 10 billion by offloading the 10 million shares with a face value of Tk 100 each. The offer price of a share will be Tk 1,000 including a premium of Tk 900, subject to the approval of SEC.
GULFOODS
The company will be placed in "Z" category from existing "B" category with effect from 14.12.09, as the company did not recommend any dividend for the year 2008-09.
11 Dec 2009
Stock experts criticise direct listing decision
Stock market experts are strongly opposed to the recent government decision to deprive the established and profit-earning private sector companies of the direct listing opportunities. The decision what they said, would discourage the established private companies to come to the market.
They said it seems like that the government is discouraging the reputed private sector companies to float share when there is a dearth of good scrips.
The Securities and Exchange Commission (SEC) on December 02 last, following a government decision, asked the bourses not to allow companies, other than the state-owned ones, to be listed under direct listing regulations.
It is absolutely a negative decision so far as stock market development is concerned, former Dhaka bourse chief executive officer and professor of Dhaka University Salahuddin Ahmed Khan told the FE.
"The profitable and recognised companies will not be interested to float share without direct listing," he said.
Under the direct listing method, sponsors or the entrepreneurs get the amount raised from the market whereas under initial public offering (IPO) the amount goes to the company.
He said it is discriminatory that the government companies are only allowed to float share under the direct listing method.
The DU professor said the market is not matured enough and the mandatory 40 per cent IPO flotation system may not bring good results.
"Corporate culture is not established in Bangladesh and owners of the companies may not be interested to offload a big chunk of share and may lose the absolute ownership," he explained.
Echoing the same view, stock market expert and professor of economics department of DU Abu Ahmed said 'crude entrepreneurs' may take the advantage of 40 per cent IPO system.
"If company could fulfil its needs by floating 20 per cent of the shares and in that case why should it float 40 per cent?" he questioned.
The government cannot force a company to raise money from the market which it does not need, he said.
"It will also be difficult for big companies, say, which have paid up capital of over Tk 10 billion (1,000 crore), to float shares," he added.
The expert feared that dishonest entrepreneurs may inflate their financial statements to raise money and it can be used for other purposes.
About direct listing, he said, it is a bad decision as it will discourage the reputed companies to come to the market.
"The government could have allowed the direct listing, making the book building method mandatory," he said.
AIMS Managing Director Yawer Sayeed said the decisions are anti-supply and these will obstruct the private sector to float shares.
"The government has failed to differentiate why a company opts for IPO and another company for direct listing," he said.
When a company needs money, it raises the capital through IPO and when entrepreneurs want to sell a part of its ownership with big profit, they opt for direct listing, he explained.
"Usually big companies with reputed brand name and good image want to be listed under direct listing method," he said.
They said it seems like that the government is discouraging the reputed private sector companies to float share when there is a dearth of good scrips.
The Securities and Exchange Commission (SEC) on December 02 last, following a government decision, asked the bourses not to allow companies, other than the state-owned ones, to be listed under direct listing regulations.
It is absolutely a negative decision so far as stock market development is concerned, former Dhaka bourse chief executive officer and professor of Dhaka University Salahuddin Ahmed Khan told the FE.
"The profitable and recognised companies will not be interested to float share without direct listing," he said.
Under the direct listing method, sponsors or the entrepreneurs get the amount raised from the market whereas under initial public offering (IPO) the amount goes to the company.
He said it is discriminatory that the government companies are only allowed to float share under the direct listing method.
The DU professor said the market is not matured enough and the mandatory 40 per cent IPO flotation system may not bring good results.
"Corporate culture is not established in Bangladesh and owners of the companies may not be interested to offload a big chunk of share and may lose the absolute ownership," he explained.
Echoing the same view, stock market expert and professor of economics department of DU Abu Ahmed said 'crude entrepreneurs' may take the advantage of 40 per cent IPO system.
"If company could fulfil its needs by floating 20 per cent of the shares and in that case why should it float 40 per cent?" he questioned.
The government cannot force a company to raise money from the market which it does not need, he said.
"It will also be difficult for big companies, say, which have paid up capital of over Tk 10 billion (1,000 crore), to float shares," he added.
The expert feared that dishonest entrepreneurs may inflate their financial statements to raise money and it can be used for other purposes.
About direct listing, he said, it is a bad decision as it will discourage the reputed companies to come to the market.
"The government could have allowed the direct listing, making the book building method mandatory," he said.
AIMS Managing Director Yawer Sayeed said the decisions are anti-supply and these will obstruct the private sector to float shares.
"The government has failed to differentiate why a company opts for IPO and another company for direct listing," he said.
When a company needs money, it raises the capital through IPO and when entrepreneurs want to sell a part of its ownership with big profit, they opt for direct listing, he explained.
"Usually big companies with reputed brand name and good image want to be listed under direct listing method," he said.
10 Dec 2009
S Alam to issue one right share for two existing shares
The Securities and Exchange Commission (SEC) has allowed S Alam Cold Rolled Limited to issue one right share for two existing shares.
According to approval of the SEC, the company will go for right issue of 26,67,240 ordinary shares of Tk 100.00 each at totaling Tk 26,67,24,000.00 at a ratio of 1:2.
The proceeds of the rights will be used to subscribe and hold 70 per cent equity of a private limited captive power generation company namely S Alam Power Generation Limited.
The total estimated cost of the project is of Tk 1459.39 million, out of which Tk 266.72 million will be invested by S Alam Cold Rolled Limited from the rights issue.
According to approval of the SEC, the company will go for right issue of 26,67,240 ordinary shares of Tk 100.00 each at totaling Tk 26,67,24,000.00 at a ratio of 1:2.
The proceeds of the rights will be used to subscribe and hold 70 per cent equity of a private limited captive power generation company namely S Alam Power Generation Limited.
The total estimated cost of the project is of Tk 1459.39 million, out of which Tk 266.72 million will be invested by S Alam Cold Rolled Limited from the rights issue.
Investors go on hunger strike
A group of retail investors yesterday went on hunger strike in front of the Securities and Exchange Commission office demanding that the market regulator do not move for leave to appeal against a High Court order on a mutual fund case.
The investors, who have investments in mutual funds, took to the street with festoon and placard under the banner “Share Market Retail Investors Forum”, also demanded withdrawal of a ban on margin loan facilities to mutual funds imposed by the SEC on October 26.
They, however, called off the hunger strike after three hours on intervention by SEC Chairman Ziaul Haque Khondker.
The investors told the chairman that due to the case, mutual funds have not been giving dividends for a couple of years now.
But now, they said, the case has now been disposed of by the High Court. If the SEC appeals with the Supreme Court, the issue of dividends will remain pending once again.
The High Court handed down the verdict on November 8 allowing closed-end mutual funds to issue bonus or right issues.
The SEC chairman told the strikers that the commission would reach a decision on any move for leave to appeal after receiving the certified copy of the High Court verdict.
On the margin loan issue, Khondker assured them of considering their demand to lift restrictions on margin loan facilities to mutual funds.
Offshore banking takes on local look
Rising reserve and remittance encouraged local banks to peg offshore banking business, once dominated by a few foreign banks.
Regulatory body Bangladesh Bank believes that allowing more offshore banking will help utilise the huge foreign currency reserves and increase competition among players.
Recently, the central bank has allowed the offshore banking unit (OBU) facility to six more private commercial banks (PCBs), taking the tally to 17, according to latest data.
“BB wants to utilise part of its huge foreign exchange reserve -- now $10 billion -- through OBUs,” said Anis A Khan, managing director of Mutual Trust Bank that received the OBU licence last week.
BB has already allowed Eastern Bank to give fund worth $117 million to Biman Bangladesh Airlines to purchase carriers under the offshore banking business. BB will lend Eastern Bank the foreign currency from its reserve funds.
It is mandatory that an OBU transacts in foreign currencies. So local PCBs previously could not go outside export processing zones to lend to intended borrowers. The restriction is no longer in force. The central bank has recently allowed offshore banking outside the EPZs, which means local companies can now take foreign currency loans.
Six PCBs -- AB, BRAC, The City, IFIC, Mutual Trust and Premier -- have been given the OBU licence over the past couple of months. Six more PCBs -- Bank Asia, Dhaka Bank, Eastern, Prime, National and Southeast -- are already on the scene.
Some other PCBs are planning to launch OBUs next year.
Five foreign banks -- Citi, Bank of Ceylon, HSBC, Standard Chartered and Woori -- started offshore banking in Bangladesh about a decade or so ago.
“The offshore banking opportunity in Bangladesh is good as the market is rising constantly,” said Abdul Wadud, senior vice president and head of Structured Finance Unit, Eastern Bank.
A senior HSBC official welcomed the move cautiously. “It is encouraging that more banks are entering offshore banking,” said Mahbub-ur-Rahman, corporate banking head of HSBC.
But Rahman questioned the source of foreign currencies that should come from sustainable sources.
A foreign bank can obtain foreign currency from its parent organisation easily, which a local bank cannot.
But the Mutual Trust managing director observes no problems with the source of foreign currencies.
Khan identified several sources, including remittance, borrowing from foreign banks, deposits of foreign banks and EPZs, and the foreign exchange reserve.
The financial statements of OBUs are prepared in foreign currencies and separately, in accordance with BB regulations.
Transactions in foreign currencies are recorded in the functional currency, at the rate of exchange prevailing on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the rate of exchange ruling at the balance sheet date.
9 Dec 2009
Finance ministry's intervention slows down approval of mutual fund
Delay in giving decision by the Securities and Exchange Commission (SEC) on the floatation of a number of mutual funds clouds the prospects of the growing mutual fund segment of the capital market, experts said.
More than 30 proposals for floating mutual funds have been awaiting approval of the securities regulator for months. The SEC has not been able to give its decision for more than a year in the case of a few proposals.
The SEC, according to sources, has been deliberately delaying the approval following the finance ministry's decision to allow more mutual funds in phases. The commission had earlier set up a separate wing for expediting the approval of mutual funds about a year back.
SEC chairman Ziaul Haque Khandaker told the FE that one of the reasons for the delay in approval was the directive issued in June last to offer 50 per cent of the total size of the each fund for public subscription.
"The decision of the ministry to allow MFs in phases will hinder the growth of the industry," said Wali-Ul-Maroof Matin, a leading capital market expert. "The concept that too many mutual funds would have a negative impact on the market is wrong," he said.
"Mutual funds should account for at least 15 per cent of the total market capitalization to help stabilize the market," Matin said adding that the mutual funds market cap is negligible here compared to that of our neighbors like India and Pakistan.
Moin Al Kashem, chief executive officer of Prime Finance Asset Management Company (AMC), who also holds the same view, said, "The slow approval process will nip the industry in the bud." Mutual funds are necessary to minimise the risks of the small investors and reduce the market volatility as they are managed by professionals, " he added.
The mutual fund industry in Bangladesh is among the fastest growing financial services. During the last two years, 10 out of the total 12 asset management companies began operation.
" A mutual fund, managed by competent professionals, can reduce market volatility and risk of loss by retail investors," said Hasan Imam, chief executive officer and managing director of the RACE AMC.
A mutual fund is a portfolio, or collection, of individual securities (some combination of stocks, bonds, or money market instruments) managed according to a specific objective spelled out in the fund's prospectus. A mutual fund pools investors' money and invest the same in securities on their behalf.
Yawer Sayeed, a leading fund manager, said, "As per the mutual fund rules, a full and complete application is to be consented by the commission within 30 days."
"Therefore, micromanagement attempted by the ministry of finance undermines the authority of the SEC and its rules," he said.
On the question whether there are too many mutual funds coming to the market in Bangladesh, a study by Argus Research, a capital market research organization, shows that mutual fund assets in the neighboring countries like India and Pakistan account for more than 14 per cent and 9.0 per cent respectively of the total market capitalization of those countries. While in Bangladesh, mutual funds' share in the total market capitalization is only 1.0 per cent.
Statistics show that that the mutual fund industry's growth has not kept pace with the growth of the market capitalization in Bangladesh; from 2006 to 2009 mutual fund asset have declined from 1.6 per cent to 1.0 per cent of overall market capitalization.
Ehsan Kabir, senior analyst at Argus Research, said " Between 2006 and 2009 the share of the mutual fund industry has declined from 1.6 per cent to only 1.0 per cent in the overall market capitalization of DSE."
Therefore the data does not support the common perception that the mutual fund industry is becoming too large too fast. Actually, the opposite has taken place, he added.
The proposed mutual funds awaiting the SEC approval include, IDLC First Mutual Fund, BGIC First Mutual Fund, Reliance Insurance Mutual Fund, Prime Finance Second Mutual Fund, Rupali Life Insurance MF, SIBL First Mutual Fund, Northern General Insurance First Mutual Fund, Prime Finance Open End Mutual Fund, IFIC First Mutual Fund, EBL NRB Mutual Fund, People's Life Insurance Mutual Fund, Janata Bank First Mutual Fund, AB Bank Client Mutual Fund, Trust Bank NRB Mutual Fund and PHP First Mutual Fund.
More than 30 proposals for floating mutual funds have been awaiting approval of the securities regulator for months. The SEC has not been able to give its decision for more than a year in the case of a few proposals.
The SEC, according to sources, has been deliberately delaying the approval following the finance ministry's decision to allow more mutual funds in phases. The commission had earlier set up a separate wing for expediting the approval of mutual funds about a year back.
SEC chairman Ziaul Haque Khandaker told the FE that one of the reasons for the delay in approval was the directive issued in June last to offer 50 per cent of the total size of the each fund for public subscription.
"The decision of the ministry to allow MFs in phases will hinder the growth of the industry," said Wali-Ul-Maroof Matin, a leading capital market expert. "The concept that too many mutual funds would have a negative impact on the market is wrong," he said.
"Mutual funds should account for at least 15 per cent of the total market capitalization to help stabilize the market," Matin said adding that the mutual funds market cap is negligible here compared to that of our neighbors like India and Pakistan.
Moin Al Kashem, chief executive officer of Prime Finance Asset Management Company (AMC), who also holds the same view, said, "The slow approval process will nip the industry in the bud." Mutual funds are necessary to minimise the risks of the small investors and reduce the market volatility as they are managed by professionals, " he added.
The mutual fund industry in Bangladesh is among the fastest growing financial services. During the last two years, 10 out of the total 12 asset management companies began operation.
" A mutual fund, managed by competent professionals, can reduce market volatility and risk of loss by retail investors," said Hasan Imam, chief executive officer and managing director of the RACE AMC.
A mutual fund is a portfolio, or collection, of individual securities (some combination of stocks, bonds, or money market instruments) managed according to a specific objective spelled out in the fund's prospectus. A mutual fund pools investors' money and invest the same in securities on their behalf.
Yawer Sayeed, a leading fund manager, said, "As per the mutual fund rules, a full and complete application is to be consented by the commission within 30 days."
"Therefore, micromanagement attempted by the ministry of finance undermines the authority of the SEC and its rules," he said.
On the question whether there are too many mutual funds coming to the market in Bangladesh, a study by Argus Research, a capital market research organization, shows that mutual fund assets in the neighboring countries like India and Pakistan account for more than 14 per cent and 9.0 per cent respectively of the total market capitalization of those countries. While in Bangladesh, mutual funds' share in the total market capitalization is only 1.0 per cent.
Statistics show that that the mutual fund industry's growth has not kept pace with the growth of the market capitalization in Bangladesh; from 2006 to 2009 mutual fund asset have declined from 1.6 per cent to 1.0 per cent of overall market capitalization.
Ehsan Kabir, senior analyst at Argus Research, said " Between 2006 and 2009 the share of the mutual fund industry has declined from 1.6 per cent to only 1.0 per cent in the overall market capitalization of DSE."
Therefore the data does not support the common perception that the mutual fund industry is becoming too large too fast. Actually, the opposite has taken place, he added.
The proposed mutual funds awaiting the SEC approval include, IDLC First Mutual Fund, BGIC First Mutual Fund, Reliance Insurance Mutual Fund, Prime Finance Second Mutual Fund, Rupali Life Insurance MF, SIBL First Mutual Fund, Northern General Insurance First Mutual Fund, Prime Finance Open End Mutual Fund, IFIC First Mutual Fund, EBL NRB Mutual Fund, People's Life Insurance Mutual Fund, Janata Bank First Mutual Fund, AB Bank Client Mutual Fund, Trust Bank NRB Mutual Fund and PHP First Mutual Fund.
SEC restricts loan to cos having PE ratio above 75
The Securities and Exchange Commission (SEC) Wednesday restricted loan facilities to the companies whose price-earning (PE) ratio was above 75 with immediate effect, putting a lid on overvalued stocks.
The fresh directive will not be applicable for mutual funds, paper shares, poor performing Z-category companies, and newly shifted category and listed companies, meaning that as per previous directive the loan margin suspension will remain in force.
The commission also withdrew the ban on credit facilities of 28 companies.
The decision came at the 'commission meeting' with SEC Chairman Ziaul Haq Khondker in the chair.
"The companies having PE ratio over 75 will not be considered marginable securities ," said Mansur Alam, member of the commission.
There are 37 companies having PE ratio of over 75, including Legacy Footwear, Ambee Pharma, Rangpur Foundry, BangladeshPlantation, Islami Insurance BD. Ltd, BD Autocars, BDCOM Online Ltd, Summit Alliance Port Limited, Dacca Dyeing and Manufacturing Company, Bangas, Janata Insurance, Gulf Foods, Alltex Industries, Miracle Industries, 1st BSRS, In Tech Online Ltd, Purabi General Insurance, Meghna Cement, Beximco Synthetics, Desh Garments, Daffodil Computers, Monno Ceramic, Eastern Lubricants, Lafarge Surma Cement, Modern Dyeing, Kay and Que, BD Welding Electrodes, GQ Ball Pen, BSC, Aramit Cement, Bangla Process, Fine Foods and Anlima Yarn, according to the Dhaka Stock Exchange (DSE).
Moin Al Kashem, a market expert, said, "It's a good move and the decision will ensure concentration on fundamentally strong shares."
On October 21, 2009 the SEC stopped providing or disbursing of any further margin loan or credit facilities against shares of 28 companies.
The fresh directive will not be applicable for mutual funds, paper shares, poor performing Z-category companies, and newly shifted category and listed companies, meaning that as per previous directive the loan margin suspension will remain in force.
The commission also withdrew the ban on credit facilities of 28 companies.
The decision came at the 'commission meeting' with SEC Chairman Ziaul Haq Khondker in the chair.
"The companies having PE ratio over 75 will not be considered marginable securities ," said Mansur Alam, member of the commission.
There are 37 companies having PE ratio of over 75, including Legacy Footwear, Ambee Pharma, Rangpur Foundry, BangladeshPlantation, Islami Insurance BD. Ltd, BD Autocars, BDCOM Online Ltd, Summit Alliance Port Limited, Dacca Dyeing and Manufacturing Company, Bangas, Janata Insurance, Gulf Foods, Alltex Industries, Miracle Industries, 1st BSRS, In Tech Online Ltd, Purabi General Insurance, Meghna Cement, Beximco Synthetics, Desh Garments, Daffodil Computers, Monno Ceramic, Eastern Lubricants, Lafarge Surma Cement, Modern Dyeing, Kay and Que, BD Welding Electrodes, GQ Ball Pen, BSC, Aramit Cement, Bangla Process, Fine Foods and Anlima Yarn, according to the Dhaka Stock Exchange (DSE).
Moin Al Kashem, a market expert, said, "It's a good move and the decision will ensure concentration on fundamentally strong shares."
On October 21, 2009 the SEC stopped providing or disbursing of any further margin loan or credit facilities against shares of 28 companies.
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