The securities regulator yesterday gave green light to the Dhaka Stock Exchange to sell 25 percent of its stake to a Chinese consortium.
The Bangladesh Securities and Exchange Commission (BSEC) is evaluating only the Chinese investment proposal which the DSE board has put forward, KAM Majedur Rahman, managing director of the bourse, told a press conference at his office.
The regulator gave the go-ahead in favour of the Chinese party over a bid by an Indian consortium at a meeting with the DSE.
The BSEC has formed an evaluation committee to examine the investment proposal of the consortium of the Shanghai Stock Exchange and the Shenzhen Stock Exchange. The committee was asked to submit a report by 10 days.
Rahman said the BSEC would examine whether the conditions of the investment agreement comply with the Demutualisation Act 2013.
He said the DSE would get a year to complete the share transfer once the final approval is given.
The consortium has proposed to buy the stake to become a strategic partner of the bourse. It offered to buy 45 crore shares at Tk 22 each and also extend technical support worth $37 million or about Tk 300 crore. In exchange, the consortium has sought a seat on the DSE board and assured that it would not ask for any return on its investment for 10 years, according to the DSE.
Another consortium led by the National Stock Exchange of India had offered to purchase the same number of shares but for Tk 15 each. It also offered technical support but it did not give a monetary value.
Rahman said the selection of the strategic partner put the investors in dilemma. Besides, the impact of the conservative monetary policy has impacted the market. But both the monetary policy and the strategic partnership are policy-related issues and should not affect the market, he said.
The broad index DSEX tumbled below 5,800-level yesterday after losing 327 points in the last seven sessions.
Retail investors remained cautious amid various confusing issues circulating in the market. Besides, institutional investors could not support the market more because of the liquidity crisis, said Rahman. Though the central bank has extended the deadline for lowering the loan-deposit ratio, banks made some adjustment creating the cash crunch for merchant banks, he explained.
The Bangladesh Bank's calculation of the capital market exposure on the consolidated basis instead of solo basis led to the liquidity crisis, causing the market to fall, said Khairul Bashar Abu Taher Mohammed, secretary general of the Bangladesh Merchant Bank Association.
Banks can invest up to 25 percent of its capital in the stockmarket under the solo basis calculation. The consolidated calculation takes into account all investments through a bank and its subsidiaries and the limit is the highest 50 percent.
The DSEX declined 57.56 points, or 0.98 percent, to 5,774 yesterday. Turnover fell 8.70 percent to Tk 350 crore from the previous session.
The market started the session on a negative note and continued downward trajectory throughout the session as selling pressure kept on.
Engineering sector led the turnover list contributing 17.42 percent to the total. Most of the prominent sectors witnessed moderate correction. Telecoms lost 1.24 percent and banks 1.22 percent. Olympic was the highest traded share with securities worth Tk 21.53 crore changing hands, followed by Ifad Auto with its shares valued Tk 16.43 crore transacted.