DSE yet to get benefits from strategic partner

Staff Correspondent | Published: 00:00, Sep 14,2019

 
 

The Dhaka Stock Exchange is yet to get any noticeable benefit from its strategic partner even after one year of its joining the bourse.

A Chinese consortium of Shenzhen Stock Exchange and Shanghai Stock Exchange on September 4 last year joined the DSE as its strategic shareholder by purchasing 25 per cent shares of the Bangladesh’s premier bourse for Tk 947 crore.

Stock market experts said that the DSE management failed to reap benefits from the consortium though it painted a ‘rosy picture’ during the induction of the foreign partner into the bourse.

The capital market has been going through a rough phase in recent months and crying for support, they said.

The bearish trend wiped off around Tk 50,000 crore of the DSE market capitalisation in last seven months.

Market experts said either the bourse’s business team was not proficient enough to extract benefits from the foreign partner in this situation, or the consortium was ‘lackadaisical’ in terms of contributing to the market development.

The director appointed by the consortium to the DSE board joined the board meeting through video conferencing most of the time and the board hardly got any input from the director regarding its regular activities, said a DSE official.

The consortium has some development plans but many of them are hard to implement in the Bangladesh context and those will take long time to execute, he said.

He said that the consortium suggested launching of V-next platform to connect the foreign investors with the local ones. The bourse expected that huge investments could be brought to the country’s capital market through the platform if the local investors could entice them.

The DSE has also been working to introduce electronic disclosure system, index business, small and medium IPOs to diversify the market, and to empower surveillance and trading mechanism. All the devel opment plans appeared to remain on paper.

The foreign investors in recent months withdrew a significant amount of funds from the capital market that worsened the market situation.

If the DSE can bring investments from Chinese network, the investments would turn around the market and investors would regain confidence in the market, market experts said.

They said that the DSE should seek more support from the consortium to find out deficiencies of the market and suggestions for enforcement issues.

The Chinese consortium offered technical assistance worth over $37 million to the DSE in training and consulting services that are yet to begin.

The DSE members got Tk 947 crore from the Chinese consortium by selling 45,09,44,125 ordinary shares at Tk 21 each and fund is being invested in the market.

SZSE deputy director general (technical management committee) Xie Wenhai has been appointed as director to the DSE board of directors.

The Bangladesh Securities and Exchange Commission on May 3 last year approved the DSE’s proposal for selling the shares to the Chinese consortium.

The sales of strategic shares came five years after the stock exchange was demutualised to separate the ownership from its management.

Under the demutualisation, 40 per cent shares of the DSE were credited to the DSE members’ accounts, while the remaining 60 per cent were kept in a blocked account. The Chinese consortium bought 25 per cent shares from the blocked account and the bourse would float the remaining 35 per cent through an initial public offering.

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