Flash Report /
Bangladesh

Bangladesh stock market to resume on 31 May; price floor likely to stay for now

  • Dhaka Stock Exchange is preparing to start trading on Sunday; the regulators will meet 28 May to finalise plans

  • The regulators plan to restart the market even if the country-wide holiday is extended

  • The price floor is likely to stay when the market starts

Bangladesh stock market to resume on 31 May; price floor likely to stay for now
IDLC Securities
27 May 2020
Published byIDLC Securities

The Dhaka Stock Exchange (DSE) is preparing to resume its operation on 31 May 2020, according to reports. DSE has communicated to its employees to be prepared for all trading and settlement activities from Sunday. The stock exchange has taken this initiative as per the instruction of the newly appointed Chairman of Bangladesh Security & Exchange Commission (BSEC). The regulators will hold a commission meeting on 28 May 2020 (tomorrow) when they plan to finalize their decision about it.

The regulators plan to resume the market even if the government extends holiday after 30 May 2020. Please note that Bangladesh has been experiencing a 66-day long Covid-19 ‘holiday’ till 30th May, the highest lock-down in its history after the Independence War in 1971. The holiday comprises 38 days of general holiday (i.e. lockdowns), 20 weekends, and 8 public holidays.

When the market starts, the price floor is likely to stay, as mentioned by the BSEC Chairman in an earlier online interview. Since his tenure just started as the stock market regulator, he is likely to observe how the market reacts and take feedbacks from different stakeholders before reviewing the price floor withdrawal. Some stakeholders think that the withdrawal of the price floor, followed by a downtrend in the market, would trigger sales from margin loan accounts and would further worsen the situation, thus advocating for price floor. So, the price floor may not be withdrawn immediately after the market starts.

However, the price floor will lead to a low level of market turnover and shrink the profit of brokerage businesses. Therefore, the regulators have to address this issue, eventually. So, we do not expect the price floor to continue for long. First, the regulators will take steps to start the market, and then eventually lift the floor price.