Beximco, Unilever Consumer Care, five merged banks out of DSEX as DSE reshuffles indices

The Dhaka Stock Exchange (DSE) has finalised the annual rebalancing of its benchmark index and the semi-annual rebalancing of its blue-chip index, leading to the exclusion of several market heavyweights and multinational entities.

According to the latest reshuffle, 16 companies are being dropped from the DSE Bangladesh Broad Index (DSEX), while nine new firms are being included. This adjustment brings the total number of constituents in the DSEX to 319, down from the previous 326. 

The new index composition, approved by the DSE Index Committee, is scheduled to take effect on 18 January.

Among the most notable DSEX exclusions is Beximco Limited, along with the multinational Unilever Consumer Care. The list of dropped companies also highlights significant stress in the banking sector, as five banks – Exim Bank, Social Islami Bank, First Security Islami Bank, Union Bank, and Global Islami Bank – have been removed from the broad index. 

Other notable exits include Phoenix Finance, Midas Finance, Union Capital, Apollo Ispat, and Hamid Fabrics.

On the entry side, the DSEX is seeing an influx of mostly Z-category or "junk" stocks. New additions include Bangladesh Welding, Desco, Dulamia Cotton, Safko Spinnings, Standard Ceramic, and Zeal Bangla Sugar, alongside A-category firms like Hwa Well Textile and Northern Islami Insurance, and B-category Sharp Industries.

DSE officials noted that although many of the removed companies maintained substantial market capitalisation, they failed to meet the necessary trading or turnover criteria. This disconnect is largely attributed to the ongoing slowdown in the capital market, which has dampened trading activity across the board.

Under the Bangladesh Index Methodology developed by S&P Dow Jones Indices, stocks must meet specific liquidity and market cap thresholds to remain eligible. For the DSEX, a constituent must maintain a float-adjusted market capitalisation of at least Tk10 crore. More importantly, stocks are required to have a minimum six-month average daily value traded of Tk10 lakh. They must also trade for at least half of the normal trading days in each of the three months leading up to the rebalancing.

Simultaneously, the blue-chip DSE 30 Index (DS30), which represents the most investable and liquid stocks on the exchange, underwent its semi-annual rebalancing.

Three companies – Meghna Petroleum, BSRM Steel, and Fine Foods – have been included in this prestigious list. They replaced Heidelberg Materials, GPH Ispat, and Khan Brothers PP Woven Bag, which were dropped for failing to sustain the required criteria.

The DS30 is designed to reflect a significant portion of the total equity market capitalisation and is built on pillars of liquidity, financial viability, and market cap.

To qualify for the DS30, a company must have a float-adjusted market capitalisation above Tk50 crore and maintain a three-month average daily value traded of at least Tk50 lakh. Furthermore, the methodology mandates that DS30 constituents must be profitable, specifically requiring positive net income over the latest 12-month period. This is calculated by aggregating the four most recent quarters of reported net income. While the liquidity requirement can be eased to Tk30 lakh under certain conditions to maintain index size, the fundamental requirement for financial viability remains a strict barrier for entry into the blue-chip category.

In contrast to the shifts in the main board, the DSE SME Growth Index (DSMEX) remained entirely unchanged following its annual review. No new companies met the criteria for inclusion, and none of the existing 19 constituents failed to meet the requirements.

Consequently, the DSMEX will continue with its current lineup of 19 companies when the new changes take effect later this month.