SME stocks fly, turnover hits 7-month high 

Infograph: TBS

Stocks at the Small Capital Platform of the Dhaka Stock Exchange (DSE) have been flying as investors are suddenly active in buying shares.

On Wednesday, the share prices of all the traded stocks at the platform increased, and turnover rose by 121% to Tk14.23 crore.

The turnover reached its highest level since 15 September of last year, according to DSE.

On the other hand, stocks at the main board witnessed a sell-off, and low-cap scrips dominated trades as investors moved to buy junk or loss-making stocks.

Turnover at DSE has declined by 18% to Tk527.36 crore as investor participation has decreased, and DSEX, the benchmark index of DSE, increased by 1.34 points to settle at 6211.

Why are SME stock prices jumping?

The Small Capital Platform is not a general public market. Only qualified investors, who have a minimum investment of Tk30 lakh in the secondary market, are allowed to buy and sell shares on the platform.

Basically, the investment limit of qualified investors in transactions on the Small Capital Platform may be reduced, which will result in making existing investors active.

If the investment limit is reduced, it is likely to attract new investors to this platform.

Due to this, the share price of all 13 companies traded on this board increased on Wednesday.

The share prices of companies listed on this platform have been increasing for the past few days. Thus, transactions are also increasing with the increase in the DSMEX index.

According to DSE data, on 30 March, transactions on the small capital platform were only Tk3.14 crore.

As a result, the small capital platform saw the highest transaction in six and a half months on Wednesday.

Share price of Bengal Biscuits rose 7.63% to Tk88.8, and that of Wonderland Toys rose 7.39% to Tk30.5, according to DSE data.

Krishibid Feed had the most transactions, Tk4.29 crore worth of shares of the company were traded.

SME board is an alternative trading platform of the stock exchange that started in September 2021.

After launching the new platform, the SME stocks saw their prices skyrocket as the price manipulation of these shares was much easier than for the large-cap companies on the main board.

So, owing to the high risk, small or general investors are not allowed to trade on this platform.

On 4 April, the DSE asked all the stockbrokers to submit information by 10 April about their clients having at least Tk20 lakh in investments in securities if they were interested in being eligible for trading on the SME platform.

Data provided after 10 April will not be processed for the next time slot set to end on 30 June, said the premier bourse in its letter.

This fuelled speculation that the regulators were going to lower the minimum investment threshold for trading eligibility of SME stocks to Tk20 lakh from Tk30 lakh, according to stockbrokers.

Small-cap stocks dominate trading on the main board.

The small-cap firms' show continued on Wednesday at the DSE while the blue-chip stocks were stuck at the floor price.

Mainly, the low-cap stock price has been increasing as investors rush for quick gains from these stocks.

Six of the top ten gainers on Wednesday – Intech Ltd, Rahim Textile, Sonali Aansh, Gemini Sea Food, Imam Button, and AMCL Pran – are small-cap stocks.

This left most of the large-cap companies hibernating on the floor prices, or inching down above the floor, and smart money has been chasing and popping up the share prices of companies that have low market capitalisations.

The small-cap stocks' price decline over the first three months of the year created some headroom for rallies.

Out of the traded stocks, 52 advanced, 63 declined, and 62% remained unchanged.

According to Royal Capital, 273 scrips have been trading at floor price, while six scrips entered and four exited the floor price.