Fundamentally weak Khan Brothers, Sonali Paper added to CSE50 index

The Chittagong Stock Exchange (CSE) has added the fundamentally weak companies Khan Brothers PP Woven Bag and Sonali Paper to its CSE50 index – a selective index of the port city bourse.

The CSE revised its CSE50 index by replacing three companies. The third newly added company is Shahjalal Islami Bank. ACI, BBS Cables, and Saif Powertec have been removed from the index, according to a press release. 

The CSE stated that the new index will be effective from 12 September 2024. The CSE50 Index is reviewed twice a year.

Khan Brothers has been incurring losses since 2020 and, as a result, did not pay a dividend for the fiscal 2022-23. Despite not paying a dividend, its shares are still being traded under the B category, as the securities regulator relaxed the rules for downgrading stocks to the Z category.

Additionally, Sonali Paper is under scrutiny by the Bangladesh Securities and Exchange Commission (BSEC) over several allegations, including share manipulation and breaking rules to list in the main market from the defunct over-the-counter (OTC) market. Sonali Paper also incurred losses in the October-March period of FY24.

The CSE50 index companies include AB Bank, Al-Arafah Islami Bank, BSRM Limited, BSCCL, Bank Asia, BSC, Beacon Pharma, Beximco Ltd, Beximco Pharma, BRAC Bank, BAT Bangladesh, City Bank, Delta Life Insurance, Dutch-Bangla Bank, Eastern Bank, Exim Bank, First Security Islami Bank, Genex Infosys, GPH Ispat, Grameenphone, IDLC Finance, IFIC Bank, Islami Bank, Jamuna Bank, and Khan Brothers.

The remaining firms are LafargeHolcim Bangladesh, Lanka Bangla Finance, Mercantile Bank, National Bank, NCC Bank, Olympic Industries, One Bank, Orion Pharma, Padma Oil, Power Grid, Prime Bank, Pubali Bank, Robi, Sea Pearl, Shahjalal Islami Bank, Sonali Paper, Square Pharma, Summit Power, Acme Laboratories, Premier Bank, Trust Bank, Unique Hotel, UCB, United Power, and Uttara Bank.

The major criteria for a company to be included in the CSE50 index are as follows: CSE-listed securities, excluding mutual funds and corporate bonds, are eligible for the index, provided they are not classified under the Z category.

The securities should have been traded for more than 75% of the trading days. Companies are then ranked by their traded values, with the bottom 10% being excluded. Finally, companies are ranked based on their float-adjusted market capitalisation.

Earlier on Sunday, the CSE revised its blue-chip index, CSE30. The port city bourse removed 10 companies, including Apex Footwear, Exim Bank, Pubali Bank, Mercantile Bank, and Summit Power, from the CSE30 index.

After removing them, the CSE included the same number of firms, including Bank Asia, BAT Bangladesh, BSRM Steels, Square Textiles, and NRBC Bank.