Published :
Updated :
For all latest news, follow The Financial Express Google News channel.
The market cap of the Chittagong Stock Exchange (CSE) is higher than that of the main bourse - the Dhaka Stock Exchange (DSE). The CSE does not have a higher number of listed securities, nor does it have more highly valued stocks than the DSE.
So, the bourses now offer a puzzle to solve.
The market cap, which is calculated by multiplying the total number of outstanding shares by current market prices of securities, of the CSE was Tk 7,325 billion on Monday whereas the total value of securities on the DSE was Tk 7,146 billion on the same day.
The deviation could be the result of securities being traded at higher prices on the CSE, compared to the prime bourse.
Take Square Pharmaceuticals as an example since large-cap stocks usually drive the index up or down.
The stock of Square Pharma closed at Tk 230.20 per share on Monday on the premier bourse while it closed at Tk 231 each share on the CSE on the same day.
Another blue-chip scrip, Marico Bangladesh closed at Tk 2,990 a share on the CSE on Monday while it last traded at Tk 2987.60 each share on the DSE.
On the other hand, the stock of Beximco Pharmaceuticals closed at Tk 116.10 per share on the DSE, which was last traded on the CSE at a slightly lower price --Tk 115 each - on Monday.
Stock prices on the CSE and the DSE have shown no significant deviation.
The DSE has 370 listed companies, while the CSE has 331 companies.
A search for an answer to the puzzle led to the unraveling of the fact that the CSE takes into account the ATB and the SME board in the calculation of the market capitalisation. However, the DSE keeps the main index separate from the ATB and the SME board in determining the market value.
Md. Ashequr Rahman, managing director of Midway Securities, said the best practice is to display the market caps of separate boards separately. "People have a focus on the main board."
The bourses' representatives have different perspectives in this regard.
CSE's Managing Director M Shafiur Rahman Maumdar said the market cap is usually calculated considering all listed securities on a bourse; boards do not matter.
"Some bourses even calculate the value of debt securities separately. However, it's not wrong if all securities of an exchange are taken into account to calculate the market value."
On the other hand, DSE officials said the market caps of separate boards should be calculated and displayed separately.
Irrespective of the preferences of the bourses, market caps would appear very poor if debt securities are excluded. For example, the DSE's market cap would stand at only Tk 3,692 billion without debt securities and the market-cap-to-GDP ratio would be only 6.55 per cent.
Good companies' reluctance to go public and the persistent sluggish demand for stocks have kept the capital market at its nascent stage.
The number of public limited companies registered with the Registrar of Joint Stock Companies is 3,768 while the number of registered private companies is 220,534 as of June this year.
Nevertheless, the number of listed companies is only 370 even 70 years after the establishment of the premier bourse.
mufazzl.fe@gmail.com