State companies face listing warning in Bangladesh

In a strong warning, Bangladesh finance minister AMA Muhith has said heads of state enterprises will be shown the door if they fail to offload shares on the stockmarket by the ‘next’

deadline.

The government plans to extend the deadline to the noncompliant state-owned enterprises (SoE) for the last time this week, after they defied orders from the highest level to offload their shares.

“I am unhappy with them, as it is not happening. I will call them to a meeting and tell them if ‘you cannot do it within certain days you have to resign’,” the minister said while speaking to a delegation of Dhaka Chamber of Commerce and Industry at his office.

“I am going to impose the condition that if they fail, their resignations will be effective then and there.”

In the last two years, the finance minister held several meetings with the SoEs to increase supply of quality shares to the bourses. But all of them failed to oblige.

His warning came after 34 state-run enterprises repeatedly failed to go public, although the prime minister endorsed the move to shore up bourses amid a crunch of quality shares.

Muhith now plans to sit with the ministries on February 10 in an effort to increase shares of the government-run companies in the stockmarket, which is going through a turbulent period.

The government asked nine SoEs—Rupali Bank, Bangladesh Shipping Corporation, Power Grid Company of Bangladesh, Dhaka Electric Supply Company, Titas Gas Transmission and Distribution, Meghna Petroleum, Jamuna Oil, National Tubes and Eastern Lubricants Blenders—to offload 1-17 percent additional shares in the market.

The minister also held a meeting in December last year and set January 15 as the deadline to release the shares, but only Rupali Bank showed some inclination to oblige.

Muhith also sent letters to the related ministries and divisions, asking them to execute the government decision and expressed dissatisfaction over the authorities’ procrastination.

“The deadline is set in consultation with the prime minister. No ministry has the jurisdiction to change it. The ministry of energy and mineral resources did not do the right thing,” the minister said in a letter sent to the energy and mineral resources ministry after it extended the deadline to offload shares.

Liquefied Petroleum Gas, Bakhrabad Gas Transmission and Distribution Company, Gas Transmission Company, Jalalabad Gas T&T Systems, Paschimanchal Gas Company, Rupantarito Prakritik Gas Company and Sylhet Gas Fields Company, Bangladesh Gas Fields Company—all under the Energy and Mineral Resources Division—missed three deadlines in as many years, with the latest on December 31 last year.

Dhaka Power Distribution Company received four time extensions to offload 15 percent additional shares but it failed. The latest deadline expired on December 31 last year.

Rural Power Company also failed three deadlines to go

public.

Progoti Industries and Chittagong Dry Dock, both under the industries ministry, breached three deadlines and now have to list on the stockmarket by June.

GEM Company and Bangladesh Blade Factory also could not offload shares despite missing three deadlines, with the latest in December last year.

The civil aviation and tourism ministry also failed to meet two deadlines for offloading shares of Bangladesh Services Ltd (Sheraton Hotel) and Hotel International Ltd (Sonargaon Hotel). Sonargaon Hotel has been allowed extension for the third time until June 2011 to go public.

The post and telecommunications ministry could not offload shares of mobile operator Teletalk and Bangladesh Telephone Company Ltd although they were given deadlines three times.

Under the same ministry, the deadline for offloading shares of Bangladesh Cable Industries and Telephone Shilpa Sangstha expired last year.

The health and family planning ministry could not honour the government order either, as the deadline for offloading 25 additional shares of Essential Drugs Company expired twice.

The shipping ministry also missed two deadlines for offloading 17.5 percent additional shares of Bangladesh Shipping Corporation.

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Share price fall sparks protest in Bangladesh

Hundreds of angry investors took to the streets in the Bangladesh financial district of Motijheel once again to protest a slump in share prices on Sunday.

They expressed solidarity with today’s countrywide dawn-to-dusk hartal called by the main opposition BNP.

Starting on a negative note, the General Index of Dhaka Stock Exchange (DSE) came down to 6,719 points, registering a 406 points or 5.7 percent fall at the end of a four-hour trading session.

The market remained in the red for the third consecutive trading session with a cumulative drop of 590 points.

Angry investors streamed into the street in front of the premier bourse at about 12:20pm shortly after the General Index fell by more than 300 points.

They set fire to paper and wood, and blocked the road from Shapla Chattar to Ittefaq crossing, bringing traffic in the area to a halt for more than three hours.

Vehicular movement on the road resumed at about 3:45pm after the law enforcers dispersed the protesters.

The protesters were more focused on chanting slogans against the finance minister and the central bank governor than the market regulator or bourse authorities.

Some of them were calling for a “non-stop hartal” from today until the market rebounds to a satisfactory level.

BNP called the nationwide hartal today to press for a number of demands including withdrawal of cases filed against party chief Khaleda Zia and others over the Munshiganj clash, probe into the recent stockmarket crash and bringing the market manipulators to book.

The investors took to the streets the last time on January 20. The market nosedived 587 points in five minutes into the start of trading that day, despite having a circuit breaker to stop trading if the index dropped 225 points.

Market insiders said sale pressure began to mount from the opening bell making the retail investors jittery.

The downtrend was fuelled further by margin calls, and in some cases by forced or trigger sales by the institutions that provide margin loans, a market insider said.

“The institutions called for additional funds from the investors who trade on credit, as their portfolio value came down to the lowest level. If they do not deposit additional funds against their portfolio, the institutions will have to go for a trigger sale to get the credit. Some of them have already done that,” the person said, wishing anonymity.

The credit providers will be left with no alternative but to go for trigger sales unless the market bounces back. If the downtrend continues, many other institutions will do that, he added.

Referring to trigger sales, Securities and Exchange Commission Chairman Ziaul Haque Khondker said: “We will look into the matter and also try to find out any solution to avoid the trigger sales.”

The investors looked jittery from the start on the trading floor. Panic sale quickened the slump with most sectors falling more than 5 percent. The day’s turnover stood at Tk 705 crore, 4.26 percent lower than previous trading session.

Losers outnumbered gainers by 238 to 13, with four securities remaining unchanged on the DSE that traded more than 5.87 crore shares and mutual fund units.

Trading will continue tomorrow from 11:00am as usual, if enough members log in to the main server. It is mandatory that at least one third of the active members log in to begin trading.

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