Two companies, S Alam Cold Rolled Steels and Aftab Automobiles, got the nod of the Securities and Exchange Commission(SEC) to issue 5.33 million and 18 million preferenceshares respectively, company sources said.
S Alam will issue the 5.33 million preference shareswith 6 per cent interim dividends as per decision of the company taken in its EGM on December 12 last. Each share will have a face value of Tk 100.
The preference shares will be converted into ordinary shares and will remain locked-in for one year from the date of issuance.
A half of the shares will be converted on May 2 at 30 per cent discount on the basis of their weighted average price during the period from the record date to April 20.
The remaining shares will be converted on August 1 at 30 per cent discount on the basis of their weighted average price during the period from the record to July 31.
The 6 per cent dividend will be paid in two quarters. In the first quarter, an interim dividend of 3.0 per cent will be paid on April 2 and the remaining 3 per cent interim dividend of the second quarter will be paid on August 1. Their record dates will be April 30 and July 31 respectively.
On the other hand, Aftab Automobiles will issue 18 million preference shareswith 5 per cent interim dividends. Each share will have a face value of Tk 100.
12 Jan 2010
SEC pores over 'flawed indexing' info
Two bourses followed apparently flawed computations for Grameenphone shares in November, despite clear instructions from the market regulator to follow a standard indexing method.
The bourses were meant to follow the instructions from September last year.
The Securities and Exchange Commission (SEC) is yet to describe the bourses' calculations as a violation of law, but has said computations were far from "reliable and verifiable".
“We are evaluating all the information collected. If the commission finds any violation or flaw in the method of their calculation, the commission will take necessary action,” said Farhad Ahmed, executive director of SEC, in a press briefing yesterday.
The Dhaka Stock Exchange follows IASCO-recommended guidelines in index counting, while the Chittagong Stock Exchange follows the Laspeyres index calculation method.
The SEC at a meeting on May 28, 2009 directed the two stock exchanges to strictly follow index calculations as prescribed by their respective systems.
IASCO guidelines say the calculation must be 'reliable and verifiable', and the Laspeyres method emphasises that index counting will be based on weighted average prices of a base period.
The search for information by the market watchdog comes, as it suspects that DSE followed different methods in different times.
Farhad Ahmed of SEC said the media reported that the exchanges had violated IASCO guidelines in index calculation and the market is based on flawed indexation.
“It is not appropriate, as the IASCO guideline does not say the index calculation should be from the second day of a company's share trading or that it should not be based on the first day's transaction," he said.
"The IASCO guideline says the calculations must be reliable and verifiable, which means the index can be counted from any day of a company's trading debut."
But both DSE's and CSE's calculation while incorporating Grameenphone shares showed unusual reflections in the key indices, which means the index calculation was not reliable and verifiable, he said.
The flawed counting also resulted in confusion among market experts, analysts, investors and stakeholders.
On November 16, 2009, the trading debut day of Grameenphone, the benchmark index of DSE skyrocketed by more than 764 points, as DSE counted the index from the first day, based on the face value of each Grameenphone share at Tk 10.
On the other hand, CSE calculated the index on a five-day weighted average price of Grameenphone shares, which also did not give an accurate picture in the index.
About the meeting in May, Satipati Moitra, chief executive officer of DSE, said: “I can hardly remember anything about the meeting. I will not say anything on the issue. Moitra was present at the meeting as the then chief financial officer.
CSE authorities say they calculated the index based on the Laspeyres method, the one they usually follow.
However, the distortion was acute in the case of Grameenphone, because of its size. Even though the same methods were followed in the previous cases, the distortions were not reflected because of the small capital sizes.
SEC now ordered the two exchanges to start counting the index from the second day of a company's trade, based on the first day's closing price.
“As it had seen a huge gap, in most cases, between the first day's trading price and the IPO price, the commission suggests counting the index from the second day,” Farhad Ahmed explained.
9 Jan 2010
Telenor acquires more 11pc stake in Uninor
NEW DELHI, Jan 9 (Economic Times): Norway's Telenor Friday bought 11 per cent more in Uninor, the mobile phone joint venture with real estate developer Unitech, for Rs 15 billion. The move will help the Indian venture fight the tariff war in the fast-growing wireless market.
"This third investment, as the earlier transactions, will provide Uninor with working capital to fund roll out of services across India," its executive vice-president and head of Asian operations, Sigve Brekke said in a statement.
With this investment, Telenor Group's stake in Uninor raises to 60.1 per cent and it has the option to raise it to as much as 67.25 per cent. The Norwegian company will invest the fourth and final tranche by the end of this fiscal.
"This third investment, as the earlier transactions, will provide Uninor with working capital to fund roll out of services across India," its executive vice-president and head of Asian operations, Sigve Brekke said in a statement.
With this investment, Telenor Group's stake in Uninor raises to 60.1 per cent and it has the option to raise it to as much as 67.25 per cent. The Norwegian company will invest the fourth and final tranche by the end of this fiscal.
Telenor acquires more 11pc stake in Uninor
NEW DELHI, Jan 9 (Economic Times): Norway's Telenor Friday bought 11 per cent more in Uninor, the mobile phone joint venture with real estate developer Unitech, for Rs 15 billion. The move will help the Indian venture fight the tariff war in the fast-growing wireless market.
"This third investment, as the earlier transactions, will provide Uninor with working capital to fund roll out of services across India," its executive vice-president and head of Asian operations, Sigve Brekke said in a statement.
With this investment, Telenor Group's stake in Uninor raises to 60.1 per cent and it has the option to raise it to as much as 67.25 per cent. The Norwegian company will invest the fourth and final tranche by the end of this fiscal.
"This third investment, as the earlier transactions, will provide Uninor with working capital to fund roll out of services across India," its executive vice-president and head of Asian operations, Sigve Brekke said in a statement.
With this investment, Telenor Group's stake in Uninor raises to 60.1 per cent and it has the option to raise it to as much as 67.25 per cent. The Norwegian company will invest the fourth and final tranche by the end of this fiscal.
5 Jan 2010
GEMINISEA; FINEFOODS; SINOBANGLA
As per decision of SEC, trading of the shares of the company will be held in Demat form with effect from January 28, 2010. In this respect, trading of the shares of the company will be allowed only in the spot market on January 24, 2010 and trading of the shares will remain suspended during January 25-27, 2010 for finalization of Demat proces
Flawed DSE index and indulgent regulator
The index of a major bourse represents the performance of the stock market of a country and, to a great extent, highlights the investors' sentiment on the state of its economy.
However, there could be exceptions. The stock market developments, primarily based on investors' interest in stocks, sometimes may not reflect the situation prevailing in other areas of the economy. Bangladesh market is a testimony to that fact.
But what if the indices of the country's premier bourse are calculated deliberately on flawed premises, ignoring internationally accepted practices?
Newspaper reports have revealed that the Dhaka Stock Exchange (DSE) has been, deliberately or otherwise, following a flawed system to calculate its daily index. The securities regulator -- the Securities and Exchange Commission (SEC) -- was aware of the folly but ignored it.
The point that the newspaper reports have highlighted is that the DSE has been counting index points in the case of a debutant company from the very first day of its trading. Moreover, while calculating index it takes into account the face value of a stock, not the premium value, if there is any.
The incumbent chairman of the SEC has admitted that the index calculation by the DSE is flawed since the first day trade of a company on a stock does not provide benchmark from where points could be calculated.
The SEC has already asked the DSE authorities to start counting index points in the case of a debutant company from the second day of its trading.
But why have the internationally accepted best norms of index calculation -- that the DSE had agreed to introduce back in 1998 -- been ignored this time?
The securities regulator, too, cannot shirk its responsibility. It is expected to see that information given by the bourses for the consumption of the investors are correct, not manipulated ones.
Had the DSE followed a correct method of calculation, its index would not have reached the present high level.
For instance, on the first trading day of Grameenphone, the largest ever issue listed with the country's bourses, the DSE took into account the face value of its share at Tk. 10, not its premium value of Tk. 60, for index calculation. This has resulted in the skyrocketing of the general index of DSE (DGEN). A total of 764 points were added to the DGEN on the day and the GP alone contributed more than 400 points.
Interestingly, the Chittagong Stock Exchange (CSE), country's second yet smaller bourse, however, did follow the standard practice of index calculation. It did calculate the index points of GP on the second day of its trading to give a correct picture.
This quantum jump of the price-weighted index, where price movement of even a single security does heavily influence the value of the index, did otherwise send wrong message to general investors, particularly the small ones. Encouraged by the market-trend, more and more people, in the meanwhile, have been attracted to a market where most stocks are highly over-priced and, the possibility of ordinary investors' being burnt in the event of the worst happening, can not be ruled out.
Many small investors have already lost a large part of their investment but they are still hanging on with a hope to recover the loss.
It is not befitting for anyone, particularly among the DSE top brass, to bask in the glory of high growth of the market, genuine or otherwise. They do need to advise the investors to be cautious in making investments in an overheated market and not appear before the media all the time when the index is up.
The SEC in a meeting with the chief executive officers of the bourses Tuesday asked to follow the method of calculating index for a debutant company from the second day of its trading. The SEC order will be applicable in the case of next debutant issue.
So, the present index calculated wrongly would not be corrected. That is what, actually, the authorities of the bourse did, perhaps, want the most. For, if the wrongs are righted the DGEN would come down to around 3000. The DSE cannot afford such a drastic fall in index since it would leave a negative impression among the investors about the market. For the greater interest of the market, one might accept the latest SEC directive.
But, at the same time, one will have some valid reasons to question the 'wisdom' of those, past and present who missed up the issue of index calculation. It is a technical matter and most investors, institutional investors included, are not aware how it is done. But the regulator must be having the requisite expertise to examine the issues involved in index calculation. It should then explain why it has not been able to apply this expertise when mistakes, deliberately or otherwise, were committed while calculating the index.
However, there could be exceptions. The stock market developments, primarily based on investors' interest in stocks, sometimes may not reflect the situation prevailing in other areas of the economy. Bangladesh market is a testimony to that fact.
But what if the indices of the country's premier bourse are calculated deliberately on flawed premises, ignoring internationally accepted practices?
Newspaper reports have revealed that the Dhaka Stock Exchange (DSE) has been, deliberately or otherwise, following a flawed system to calculate its daily index. The securities regulator -- the Securities and Exchange Commission (SEC) -- was aware of the folly but ignored it.
The point that the newspaper reports have highlighted is that the DSE has been counting index points in the case of a debutant company from the very first day of its trading. Moreover, while calculating index it takes into account the face value of a stock, not the premium value, if there is any.
The incumbent chairman of the SEC has admitted that the index calculation by the DSE is flawed since the first day trade of a company on a stock does not provide benchmark from where points could be calculated.
The SEC has already asked the DSE authorities to start counting index points in the case of a debutant company from the second day of its trading.
But why have the internationally accepted best norms of index calculation -- that the DSE had agreed to introduce back in 1998 -- been ignored this time?
The securities regulator, too, cannot shirk its responsibility. It is expected to see that information given by the bourses for the consumption of the investors are correct, not manipulated ones.
Had the DSE followed a correct method of calculation, its index would not have reached the present high level.
For instance, on the first trading day of Grameenphone, the largest ever issue listed with the country's bourses, the DSE took into account the face value of its share at Tk. 10, not its premium value of Tk. 60, for index calculation. This has resulted in the skyrocketing of the general index of DSE (DGEN). A total of 764 points were added to the DGEN on the day and the GP alone contributed more than 400 points.
Interestingly, the Chittagong Stock Exchange (CSE), country's second yet smaller bourse, however, did follow the standard practice of index calculation. It did calculate the index points of GP on the second day of its trading to give a correct picture.
This quantum jump of the price-weighted index, where price movement of even a single security does heavily influence the value of the index, did otherwise send wrong message to general investors, particularly the small ones. Encouraged by the market-trend, more and more people, in the meanwhile, have been attracted to a market where most stocks are highly over-priced and, the possibility of ordinary investors' being burnt in the event of the worst happening, can not be ruled out.
Many small investors have already lost a large part of their investment but they are still hanging on with a hope to recover the loss.
It is not befitting for anyone, particularly among the DSE top brass, to bask in the glory of high growth of the market, genuine or otherwise. They do need to advise the investors to be cautious in making investments in an overheated market and not appear before the media all the time when the index is up.
The SEC in a meeting with the chief executive officers of the bourses Tuesday asked to follow the method of calculating index for a debutant company from the second day of its trading. The SEC order will be applicable in the case of next debutant issue.
So, the present index calculated wrongly would not be corrected. That is what, actually, the authorities of the bourse did, perhaps, want the most. For, if the wrongs are righted the DGEN would come down to around 3000. The DSE cannot afford such a drastic fall in index since it would leave a negative impression among the investors about the market. For the greater interest of the market, one might accept the latest SEC directive.
But, at the same time, one will have some valid reasons to question the 'wisdom' of those, past and present who missed up the issue of index calculation. It is a technical matter and most investors, institutional investors included, are not aware how it is done. But the regulator must be having the requisite expertise to examine the issues involved in index calculation. It should then explain why it has not been able to apply this expertise when mistakes, deliberately or otherwise, were committed while calculating the index.
3 Jan 2010
JS likely to pass two new ins bills
TOKYO, Jan 3 (Reuters): The Tokyo Stock Exchange(TSE), Asia's largest equities bourse, said it would go ahead with the launch of its new trading system as planned Monday after running final checks.
The new system will be able to process trades in five milliseconds, 600 times faster than the two to three seconds needed on the current system, and roughly the same speed as the New York and Londonstock exchanges.
A spokesman the TSE said the exchange ran final checks on the system, called "Arrowhead," and determined that it was ready to be launched as planned on January 4, the first trading day of 2010.
Analysts say Arrowhead should allow for more computer-driven trading including so-called high-frequency trading where algorithms are used to trade thousands of shares in milliseconds to profit from tiny spreads and market imbalances.
The TSE, which plans to go public after April 2010, is betting on Arrowhead after several embarrassing computer glitches tarnished its image with investors.
Last month the exchange was ordered to pay $120.5 million in damages to Mizuho Securities for a botched trade in 2005.
A 2006 accounting scandal at Livedoor Co sparked a massive sell-off of the Internet company. Unable to handle the rush of orders from panicked investors, the TSE had to curtail its trading hours for three months.
The new system will be able to process trades in five milliseconds, 600 times faster than the two to three seconds needed on the current system, and roughly the same speed as the New York and Londonstock exchanges.
A spokesman the TSE said the exchange ran final checks on the system, called "Arrowhead," and determined that it was ready to be launched as planned on January 4, the first trading day of 2010.
Analysts say Arrowhead should allow for more computer-driven trading including so-called high-frequency trading where algorithms are used to trade thousands of shares in milliseconds to profit from tiny spreads and market imbalances.
The TSE, which plans to go public after April 2010, is betting on Arrowhead after several embarrassing computer glitches tarnished its image with investors.
Last month the exchange was ordered to pay $120.5 million in damages to Mizuho Securities for a botched trade in 2005.
A 2006 accounting scandal at Livedoor Co sparked a massive sell-off of the Internet company. Unable to handle the rush of orders from panicked investors, the TSE had to curtail its trading hours for three months.
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