60 DSE companies dropped off FTSE Frontier Index due to poor turnover
Only 2 new entrants, 3 downgraded to small-cap from mid-cap
Global index provider FTSE Russell has recently completed its annual review of the Bangladesh stock market, which led to the exclusion of 60 Dhaka Stock Exchange (DSE) companies from the FTSE Frontier Index Series.
The primary reason for their exclusion in the September review, which analysed Bangladeshi stocks' eligibility to be a part of its global composites, was due to the companies shares' poor liquidity in the bourses.
This development comes shortly after the positive news of FTSE Russell resuming the review of Bangladeshi stocks after a year and a half.
While only two Bangladeshi small-cap companies – Kohinoor Chemical and Khan Brothers PP Woven Bag Industries – successfully entered the updated FTSE stock universe as their market capitalisation reached above the minimum FTSE threshold for small cap firms, Bangladesh saw the highest number of companies removed from the index.
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The country was found to have been at the bottom of the frontier market list in getting fresh entrants.
The London-based index and analytics provider's Frontier Market Index Series ousted a total of 80 firms and included 60 firms in the September review.
Ratanpur Steel, was the only company that was excluded from the composite due to a decline in its market value while the other 59 were ousted due to their poor stock turnover in the Dhaka Stock Exchange.
The FTSE Frontier Index list is divided into three segments based on the size of the firms – large-cap, mid-cap, and small-cap, reflected through market capitalisation or market value of the entire company.
No Bangladeshi large and mid-cap firms made a fresh entry to the lists of investable stocks provided by FTSE to its clients interested in cross border investments.
British American Tobacco Bangladesh, Grameenphone, Investment Corporation of Bangladesh, Renata, Robi Axiata have been ousted from the large cap segment of the FTSE Frontier Index. FTSE Russell mentioned poor liquidity of their shares as the reason.
FTSE's large cap exclusion list included only six other firms from Ivory Coast, Kenya, Mauritius, Oman and Peru.
Experts blamed restrictive price measures, such as the floor price mechanism, as one of the reasons for Bangladesh's declining position in global investor sentiment.
"Implementation of floor price was one of the top reasons behind foreign investors losing their interest in the Bangladesh stock market," said IDLC Securities Head of Foreign Trade Suman Saha, adding, "Countries that had embraced such restrictive measures in the name of arresting fall later took many years to regain their trust and Bangladesh should clearly announce no repetition of such events."
In the FTSE Frontier mid-cap segment 31 of the 50 excluded firms were Bangladeshi ones. Of them, Advent Pharma, Acme Laboratories and Singer Bangladesh lost the eligibility to remain in the mid-cap list due to their declines in market capitalisation. However they were placed into the small cap segment.
On the other hand, 28 Bangladeshi firms failed to retain their position due to insufficient stock liquidity. They are ACI, Al Arafah Islami Bank, BSRM Ltd, Bangladesh Submarine Cable, Bank Asia, Beacon Pharma, Beximco Pharma, BRAC Bank, BSRM Steels, City Bank, Desco, Dutch Bangla Bank, Eastern Bank, Exim Bank, GPH Ispat, IDLC, IFIC, Linde Bangladesh, NBL, Padma Oil, Power Grid Company, RAK Ceramics, Shahjalal Islami Bank, Southeast Bank, Summit Power, Titas Gas, Trust Bank and the United Commercial Bank.
The FTSE small-cap segment saw 34 firms kicked off, of which 27 were Bangladeshi ones. They are, AB Bank, Active Fine Chemicals, Aman Feed, Bata Shoe, BBS Cables, Confidence Cement, Dhaka Bank Fareast Islami Life, First Security Islami Bank, Ifad Autos, Jamuna Bank, Khulna Power, LankaBangla Finance, Mercantile Bank, NCC Bank, One Bank, Orion Pharma, Paramount Textile, Queen South Textile, Ratanpur Steel, Saif Powertec, Shahjibazar Power, Social Islami Bank, Square Textile, Standard Bank and Wata Chemicals.
According to the 30 September FTSE report, its frontier index included 271 firms from 19 countries – Bahrain, Bangladesh, Croatia, Estonia, Macedonia, Ivory Coast, Jordan, Kazakhstan, Kenya, Lithuania, Morocco, Occupied Palestinian Territory, Oman, Pakistan, Peru, Slovenia, Sri Lanka, Tunisia and Vietnam.
The 25 Bangladeshi firms still remained as the FTSE Frontier constituency holds 4.01% of the total market capitalisation of over $95 billion of the composite.
