Stocks leap as floor price returns

Shares on the Dhaka Stock Exchange leapt yesterday largely owing to the re-introduction of floor prices that prevented securities from falling below last week's average.  

On Thursday, the Bangladesh Securities and Exchange Commission (BSEC) decided to bring back the floor price of all stocks to stop any free fall amid deepening economic uncertainty at home and abroad, much to the chagrin of institutional and foreign investors.

The move came after the DSEX Index, the benchmark index of the premier bourse in the country, slipped below the 6,000 mark to close at 5,980, the lowest level since June 7 last year.

In March 2020, the commission introduced the floor price for the first time in Bangladesh in a bid to thwart the free fall of stocks amid the onslaught of Covid-19. The measure was in place for more than a year before the regulator withdrew it in phases in line with the sharp fall in infections. Yesterday, the DSEX Index surged 153 points, or 2.57 per cent, to close at 6,133.

The DSES Index, which comprises Shariah-based firms, rose 2.39 per cent to 1,339, and the DS30 Index, which represents the blue-chip companies, jumped 2.25 per cent to end at 2,193.

Turnover rose 28.57 per cent to Tk 567 crore.

Officials of a number of brokerage houses say regulatory measures such as the floor price won't bring any long-term benefits to the market.

"It will yield short-term benefits as the market will go up and general investors will inject funds," said one broker.

"But institutional investors become worried in such a situation since their funds get stuck, while foreign investors don't want to invest in an illiquid market."