S Alam Steels, Crown Cement, 29 other listed cos removed from DSEX

The Dhaka Stock Exchange (DSE) has removed S Alam Cold Rolled Steels Limited and Crown Cement, along with 29 other listed companies, from the DSE Broad Index (DSEX).

This index rebalancing came into effect on Sunday. DSE officials noted that most of the companies, including the cement and steel producers, had sufficient market capitalisation to continue their membership in the widely followed equity index, but they failed to fulfil the stock trading or turnover criteria as asked by the DSE index methodology because of the floor price.

According to the "DSE Bangladesh Index Methodology" designed and developed by S&P Dow Jones Indices a decade ago, companies must have a free-float market capitalisation of Tk10 crore to be a constituent of the DSEX, which can go as low as Tk7 crore for an existing constituent that fulfils other criteria.

Free float market capitalisation refers to the market value of the company stake that needs no prior announcement to be sold in the market. Sponsor-directors and any other shareholder with more than 10% company stake needs prior announcement of their buy-sell intention in the company shares. The shares held by others are free-float ones by nature.

The other criteria to stay in the DSEX includes a minimum trading of company shares over the six months before the rebalancing date. Daily average trading turnover must be at least Tk10 lakh, while it can go down as low as Tk7 lakh for existing constituents that fulfil other criteria.

The third eligibility criterion for the constituency of the DSEX is that the shares must be traded on at least half of the normal trading days in each of the past three months.

Both S Alam Cold Rolled Steels and Crown Cement have more than enough – Tk153 crore and Tk363 crore – free float market capitalisation, but their shares have had bare trades in the DSE to keep them eligible for the DSEX membership because of the floor price the Bangladesh Securities and Exchange Commission (BSEC) imposed at the end of July.

The other companies that dropped from the DSEX are Golden Son, Imam Button, Zeal Bangla Sugar, Libra Infusions, Rahim Textile, Tosrifa Industries, Phoenix Finance, Atlas Bangladesh, Mozaffar Hossain Spinning, Usmania Glass, Legacy Footwear, Shepherd Industries, Premier Leasing, Meghna Pet Industries, Zahintex Industries, National Life Insurance, Dulamia Cotton, Savar Refractories, United Finance, United Insurance,) Zaheen Spinning, Renwick Jajneswar, First Finance, Daffodil Computers, Fareast Finance, Familytex, Global Heavy Chemicals, Prime Insurance and Meghna Condensed Milk.

On the other hand, seven companies – BD Thai Food, ACME Pesticides, Sena Kalyan Insurance, Union Insurance, C&A Textiles, Meghna Insurance, and Bangladesh Industrial Finance Corporation – entered the DSEX.

The number of companies in the DSEX now stands at 315.

The price fluctuation of the dropped companies would not impact the DSEX, said a DSE official.

Meanwhile, the blue-chip index DS30, which needs at least Tk50 crore free-float market capitalisation, net profits for the previous 12 months and Tk50 lakh in average daily turnover over the previous three months, have got five new entrants – IFIC Bank, Southeast Bank, Sea Pearl Beach Resort and Spa, Bangladesh Shipping Corporation, and Unique Hotel and Resorts Ltd.

They replaced Singer Bangladesh, Summit Power, Pubali Bank, Eastern Bank and LankaBangla Finance in the club of blue-chip stocks as part of the half yearly rebalancing of DS30.

None of the equity indices include mutual funds, bonds or debentures.

The DSMEX, the SME board equity index, on the other hand included two new members Nialco Alloys Ltd and Mamun Agro Products Ltd.