SME index flies as Dhaka bourse waives qualified investor registration
From now on, investors will not require a registration to become qualified investors as the Dhaka Stock Exchange (DSE) has scrapped the procedure in a move to increase participation in its SME platform.
Due to this move, the Small Capital Platform Index – DSMEX – rose 10% on Tuesday. At the same time, transactions increased by ten times.
On March 28, the country's premier bourse cancelled the registration requirement.
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From now on, the DSE will automatically register an investor if they have an investment of Tk20 lakh in their portfolios.
Following the DSE's announcement on Tuesday, the DSMEX jumped by 81 points to close at 887. At the end of the day, the turnover stood at Tk5.2 crore, which was Tk0.44 crore in the previous session.
Eight of the nine companies that traded on the day saw a rise in their share prices.
Wonderland Toys saw a 20% increase – the highest limit of circuit breaker set for the SME market – in its prices. In addition, Mamun Agro, Oryza Agro and Master Feed Agro's share prices rose 19.8%.
The market regulator had earlier taken steps to increase investor participation in the SME platform, but they were not very fruitful. One of the hurdles was the registration process, said a senior official at a brokerage firm.
Although the sector is new, there is a lack of publicity in the stock market, starting from the Bangladesh Securities and Exchange Commission (BSEC), he added.
Due to this, the official said, the share price of the companies that came to the SME platform is still close to Tk10. However, the companies are obliged to pay cash dividends of at least 10% for the next three years.
Earlier on 17 February, BSEC reduced the investment in the stock market from Tk50 lakh to Tk20 lakh to become a qualified investor in a bid to increase participation in the SME market.
In 2016, the market regulator decided to create a separate market called "Small Capital Platform" on both bourses of the country for small-cap companies seeking to be listed on stock exchanges.
Because of this, the Bangladesh Securities and Exchange Commission (Qualified Investor Offer by Small Cap Companies) Rules-2016 for low cap companies was formulated. However, in 2018, it was decided to amend some of its rules.
Then in April 2019, the DSE launched the Small Cap Market (SME) platform. Finance Minister AHM Mustafa Kamal was the chief guest at the inaugural function. Two and a half years after the launch of the SME platform, SMEs started trading on the stock market in September last year.
DSE's SME platform initially started trading with six companies.
