Prices of 45 issues are being traded below their face value of Tk 10 each on the Dhaka Stock Exchange (DSE) despite the stock index soared more than 54 per cent in the past one year.
According to available data with the DSE, some 45 securities, including 24 mutual funds, have been trading below their face value as of Thursday (July 8) as their poor performance spoiled investors' appetite.
Market analysts said investors are not encouraged to invest in these issues due to their poor financial performance, lower return and bad reputations.
Many of the companies were shut for long and did not have any financial abilities to declare dividends, leading to shares of these firms below their face value, they opined.
Some 45 issues from the seven sectors have been trading at lower than their face value of Tk 10 each as of July 8, 2021.
The Bangladesh Securities and Exchange Commission (BSEC) set a uniform face value of equity shares and mutual fund units at Tk 10 in 2011 after the stockmarket debacle in 2010.
However, prices of some companies and mutual fund units went above their face value compared to last year as some 92 issues, including 35 mutual funds, were traded below face value this time in 2020.
The stock market regulator has taken a number of decisions including restructuring the boards of "Z" category companies for bringing positive changes in their operations which helped many companies to come out from below face value.
Of the ill-fated issues, even some companies have been trading below Tk 5.0 each as of July 8 despite the market recovered substantially in the past one year.
The DSE key index soared more than 2,178 points or 54 per cent in the last one year between July 8, 2020 and July 8, 2021.
There are 378 issues, including 37 mutual funds, are listed on the Dhaka bourse now.
Of them, mutual funds are the highest in number, as 24 closed-end mutual funds, out of 37 have been trading below their face value, the DSE data shows.
Most of the mutual funds have been trading at lower than their face value for several years as poor performance and mismanagement by fund managers spoiled investors' appetite, said an analyst.
A mutual fund is an investment fund that gathers capital from a number of investors to create a pool of money that is then re-invested into stocks, bonds and other assets.
Investors, particularly individuals to the market might expect mutual funds are a safe bet considering managed by professionals, he said.
Unfortunately, not happened in Bangladesh over the years due to poor management, he said.
So, people are not encouraged to invest in these funds, he said adding that these funds are giving the others a bad name.
Non-bank financial institutions (NBFI) and textile sectors followed next as seven companies from both sectors have been trading below their face value.
In the NBFIs sector shares of BIFC, Fareast Finance, FAS Finance, First Finance, International Leasing & Financial Services, Peoples Leasing (trading suspended) and Union Capital have been trading below face value.
The investors' confidence in financial institutions sector is still very low due to some financial scams, said an analyst at a leading brokerage firm.
In the textile sector shares of C&A Textile, Familytex, Generation Next Fashions, RN Spinning Mills, Tallu Spinning, Tung HaiTextile and Zahintex Industries remained trading below face value.
From the heavyweight banking sector, three banks --ICB Islamic Bank, National Bank and Standard Bank --have been trading below their face value, out of 31 listed banks.
Two companies from pharmaceuticals & Chemicals sector - Beximco Synthetics and Keya Cosmetics have been trading below face value.
One from engineering sector -- AppolloIspat-- and one from travel & leisure sector - Bangladesh Services--have been trading below their face value.