6% of stocks make up half of Dhaka bourse turnover as majority stuck at floor

Price movement or trading turnover, everything in the Dhaka bourse has been limited to a handful of shares, when most of the listed securities have been suffocated on the floor prices even after a year since the restriction was imposed.

Of the trading turnover in the Dhaka Stock Exchange (DSE) this year, 51% has been concentrated within only 25 stocks that represent only 6% of the total number of listed companies and mutual funds, according to data compiled by the research wing of brokerage firm Royal Capital.

"This shows that a very few companies in the DSE stock universe are dominating the market," reads the report published last week.

Of the nearly Tk82,000 crore turnover registered by the premier bourse over the period of 1 January to 8 August, over Tk41,000 crore was the contribution of the 25 most active stocks.

Interestingly, none but Lafarge Holcim Bangladesh belongs to the top 20 list in terms of market capitalisation as the largest firms based on their respective market values either have been hibernating on the floor with no buyers or hovering around the floor with the threat of getting investors' capital stuck on the floor again.

State-owned Bangladesh Shipping Corporation, ICT outsourcing firm Genex Infosys, and five-star hotel owner Sea Pearl Beach Resorts were the most active three in the DSE, as they individually contributed nearly 4% of the DSE turnover for the first 250 days this year.

Eastern Housing, Gemini Sea Food, Aamra Network, Intraco, Rupali Life, Unique Hotel, Meghna Life and Bashundhara Paper – each separately contributed to over 2% of the total turnover.

Orion Infusion, Navana Pharma, ADN Telecom, Olympic Industries, RD Food, Fu-Wang Food, LafargeHolcim Bangladesh, JMI Hospital Requisite Manufacturing, Shinepukur Ceramics, IT Consultants, Orion Pharma, Delta Life, Apex Foot and BD Com were the other stocks that separately accounted for more than 1% of the turnover to form the club of new turnover elites in the premier bourse.

On the other hand, the largest 20 listed firms were Grameenphone, Walton Hi-Tech, British American Tobacco Bangladesh, Square Pharma, Robi, United Power, Renata, Beximco Ltd, Berger Paints Bangladesh, LafargeHolcim, Marico Bangladesh, Investment Corporation of Bangladesh, Beximco Pharma, Brac Bank, Beacon Pharma, Islami Bank, Dutch Bangla Bank, Titas Gas, Unilever Consumer Care and Power Grid Company of Bangladesh, according to an EBL Securities report on Thursday.

Of the giants, all but Square Pharma, Marico, Berger Paints, LafargeHolcim and Unilever Consumer Care had no buyer at the floor till the closing bell on Thursday.

No trading due to the floor has been kicking out many star-listed companies from the blue-chip clubs at the bourses of Dhaka and Chattogram, as blue-chip stocks must be liquid enough so that investors can buy or sell them with ease.

"It is unfortunate that we see a lot of blue chips freezing at the floor prices," said Md Akramul Alam, head of research at Royal Capital.

Amid the vacuum created in the large cap universe, too many funds chased too few stocks, reflecting a lack of equitable and prudent engagement of the investors, he said.

"As a result, the overall market forgoes its full potential," he added.

Ahmed Rashid Lali, former president of the DSE Brokers Association, said, "Floor price caused a fatigue in the stock market as many investors were avoiding fundamentally sound stocks at lucrative prices."

On Thursday, only 167 of the 401 DSE stocks, mutual funds, and corporate bonds were trading above the floor, and the others had no buyer at the artificially held prices.