Beximco, Islami Bank hit lower circuit as floor prices removed
Investors rush to exit long-restricted stocks but lack of buyers keeps trading volumes subdued.
Shares of Beximco Ltd and Islami Bank Bangladesh came under heavy selling pressure and fell to their lower circuit limits today (9 June) after the Bangladesh Securities and Exchange Commission removed the floor prices that had kept the two stocks under an artificial pricing mechanism for more than three years.
Beximco Ltd, a flagship concern of the Beximco Group, witnessed a flood of sell orders immediately after the market opened as investors sought to exit the stock following a prolonged period of price stagnation. However, despite the strong selling pressure, only a small number of shares changed hands because of an absence of buyers, according to trading data.
At the market opening, investors placed sell orders for 9.36 crore Beximco Ltd shares at the lower circuit price of Tk99.10 each, with a total value of Tk927.32 crore.
However, by the end of today's trading session, only 8,026 shares changed hands through just 60 trades, with a total value of around Tk8 lakh.
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Although the market witnessed significant selling pressure in Beximco Ltd shares, the stock had no impact on the benchmark index as it is excluded from the DSEX calculation for failing to meet the criteria for inclusion in the index.
A similar trading pattern was observed in Islami Bank, the largest private-sector lender. Sell orders for 17 lakh shares were placed at the lower circuit price of Tk29.40 each, with a total value of Tk5.01 crore. However, only 40,416 shares changed hands, with a turnover of Tk11.9 lakh.
Amid the selling pressure, Islami Bank alone dragged the DSEX down by around 20 points today.
Investors in Beximco Ltd and Islami Bank had remained stuck for around three years and seven months after the Bangladesh Securities and Exchange Commission imposed floor prices in October 2022 amid the fallout from the Russia-Ukraine war, acute dollar shortages, rising inflationary pressures, and a prolonged downturn in the domestic stock market.
Prior to that, the regulator introduced the floor price mechanism on 19 March 2020 during the Covid-19 pandemic, when global financial markets were experiencing severe volatility.
Although the BSEC later gradually lifted the floor price from almost all listed stocks, Beximco and Islami Bank remained under the artificial pricing mechanism.
Market participants repeatedly urged the regulator to remove the floor prices on the two stocks, but the previous commissions did not take any steps in that regard.
With the new commission taking charge of the regulatory body, the floor prices on Beximco and Islami Bank were finally withdrawn on Monday, paving the way for a return to normal market-based trading.
