Floor price was a buzzword at the Dhaka Stock Exchange (DSE) yesterday as it prevented many investors from selling shares even though trading resumed after a long break of more than two months. The Bangladesh Securities and Exchange Commission (BSEC) set the floor price on March 19 for all stocks on the basis average price of last five days to stop the market fall amid the coronavirus pandemic. It was an unprecedented move as no country in the world pulled a stunt like that to thwart the market from falling because they knew it was normal that the indexes would fall because of the pandemic. Already, many foreign investors criticised the BSEC move and now the local investors have raised their voice. “I could not sell my shares of ML Dyeing because of the floor price though I need to rearrange my portfolio,” said Khorshed Alam, a stock investor. “However, I am glad that trading has resumed,” he added. Now, the regulator should remove the floor price to make the market perfect though the index might fall initially, said Md Moniruzzaman, managing director of IDLC Investment. The floor price has had a negative impact as investors can’t sell their shares even at a lower price, the merchant banker pointed out. “It made the market illiquid and created a negative image of our market.” The regulator should not impact the pricing of stocks and should rather ensure that investors may trade without any problem, he added. “People are optimistic about the new commission and many of them bought stocks,” said M Rahmat Pasha, managing director of UCB Capital Management. The floor price has indeed had some impact but at the same time, it gave some phycological relief. “So, the floor price should be withdrawn gradually after witnessing how the market performs at least in the current week,” he said. This month, Shibli Rubayat-Ul-Islam was appointed as the chairman of the stock market regulator along with two professors from the University of Dhaka as the commissioners. “We don’t want to do anything very fast but we do realise the impact of the floor price,” Islam told The Daily Star yesterday. The new commission is now working on it and is not too far from a solution. “Now, we are observing how the solution will be implemented so that it works for the betterment of the capital market.” But people need to realise that once the floor price is lifted, there will be a huge negative impact on the index primarily, Islam added. Meanwhile, DSEX, the benchmark index of the DSE, rose 52.15 points, or 1.3 per cent, to close at 4,060.44 on the first day of trading after it closed on March 25 in line with the government declared general holiday to stop the spread of the deadly coronavirus. Investors are, however, cautious about the upcoming earnings declaration of listed firms, according to Pasha. “The earnings may fall because the firms have not been able to do business in the last two and a half months.” As the performance of the listed firms has been affected by the pandemic, dividends would also receive a blow, said a top broker. “Investors know about it and some of them will try to sell their shares.” The index will fall if the floor price does not continue. However, the fall will create an opportunity for some to park money in lucrative stocks as they know the index would move up when the pandemic peters out, the broker added. Several stocks were not traded yesterday due to the lack of buyers as they think these stocks deserve fall more. But that did not happen because of the floor price, said the broker. On the DSE, 60 stocks advanced, 68 declined and 195 were unchanged yesterday. Turnover, an important indicator of the stock market, dropped 59 per cent to Tk 148 crore. Beximco topped the gainers’ list as it advanced 10 per cent, followed by Prime Finance 1st Mutual Fund, ACI, Central Pharmaceuticals and ACI Formulations. AB Bank was the top loser shedding 10 per cent, followed by Standard Bank, Altex Industries, Premier Bank and Exim Bank. Square Pharmaceuticals was the most traded stock, followed by Beximco Pharmaceuticals, Grameenphone, Orion Pharmaceuticals and Beximco. The port city bourse also observed an upward trend. The broader CSCX index rose 92.25 points, or 1.34 per cent, to 6,952.12.
