Margin loans further relaxed to cheer up the market

The Bangladesh Securities and Exchange Commission (BSEC) has further relaxed the margin loans regulations to boost the stock market.

A paid-up capital of Tk30 crore would be enough for the listed firms that remained in "A" category for three straight years to see their stocks marginable up to the price earnings (PE) ratio of 50 from now on, said the Bangladesh Securities and Exchange Commission (BSEC) on Wednesday afternoon.

Earlier on 18 April, the regulator, to give a hand to the depressed stock market, relaxed the margin loans regulations based on which stockbrokers and merchant banks lend their clients to buy more shares or other listed securities.

Usually, stocks are marginable as long as their PE ratio is not above 40, they are not in Z category, their debut trading was not in the last 30 working days or they did not come up from Z category in the last seven working days.

Initially, two weeks ago, the BSEC relaxed margin rules for stable stocks that remain in "A" category for three consecutive years and also have a decent capital size of Tk50 crore.

The decision helped the depressed stock market run a bit over nine consecutive winning sessions till the end of April. And in May, there came some selloffs amid profit booking pressure.

Category companies pay at least 10% dividends and are regular in operations and holding annual general meetings.

And to further extend the hand to the market, the paid-up capital threshold has been reduced.

Losing the early hour momentum, DSEX, the broad-based index of the Dhaka Stock Exchange closed 0.03% lower at 6,269 on Wednesday.