SME index jumps amid 131% turnover boost

Good news from the Appellate Division of the Supreme Court in favour of the general investors on the small and medium enterprises (SME) market has led to a big upswing in the small-cap platform of the Dhaka Stock Exchange (DSE) on Tuesday.

On Tuesday, DSMEX, the SME index of the DSE, advanced by 97.03 points or 8.22% to 1,277.31, compared to the previous trading session, and turnover jumped by 131% to Tk8.31 crore.

Out of 13 scrips traded, 12 advanced, and the price of one declined.

At present, only eligible investors can invest in the SME market, with a minimum portfolio size of Tk20 lakh.

On 13 November last year, Supreme Court Lawyer Advocate Mustafa Kamal, filed a writ on behalf of Md Raju Hasan, a resident of Dilkusha in the capital, which expressed concerns over why general investors cannot participate in the SME market like the way they do in the main market.

The High Court then asked the Bangladesh Securities and Exchange Commission (BSEC) to explain the reasons behind the investment conditions in the SME market.

At the same time, the High Court has directed to dispose of the writ within the next two months so that general investors can trade in the SME market as well as in the main market.

Earlier, the BSEC appealed to the High Court to make the minimum amount of investment Tk30 lakh in the SME platform, instead of Tk20 lakh.

On 16 November 2022, the High Court suspended the condition of investing Tk30 lakh in SMEs for two months. The BSEC then appealed to the High Court against that order.

Finally, the Appellate Division suspended the BSEC's appeal regarding the investment of Tk30 lakh, which the investors welcomed as a positive news.

In FY22, investors saw impressive cash dividends from SME companies. Most companies recommended 10% cash dividends for their shareholders.

Krishibid Seed recommended 15% cash dividends which were the highest, and Nialco Alloys recommended a 5% cash dividend which was the lowest in the SME market.

At present, 15 companies are listed on the SME market.

The stock exchanges introduced their SME platform in September 2019 to attract businesses with small capital bases to the stock market and help them raise capital.

Ten firms have raised Tk112 crore through the SME Platform so far since its debut, opening up a new window for funds for SME entrepreneurs.

BSEC Executive Director Mohammad Rezaul Karim said the commission has formed the SME platform in order to support SME companies.

Some companies have already raised funds and some are in the pipeline. It will help the companies to maintain compliance to be enlisted in the main market, he added.

In November 2018, the BSEC gave final approval to the Qualified Investor Offer by Small Capital Companies Rules-2018 with some amendments.