Let's Talk Dhaka Stock Exchange!

[samircreep]

this is precisely what i don't understand! I assume ur talking about uttara bank. How on earth can prices collapse after they declare such amazing dividends? This makes no sense! Can someone explain?

[Orpheus]

Originally Posted by ammark
No its not the percentage profit per se, its the percentage of the face value of the share that they distribute from their earnings.

Hey ammark, how do you calculate how much that 100% dividend actually comes out per share? Anyone actually recieved any dividend here? How much was it per share, I am curious to know.

Regarding dividend, why would declaring dividend drive up the price of the stock? If you are thinking this way, sounds like a classic "pump and dump" scenario in Bangladesh.

[ammark]

Originally Posted by Orpheus
Hey ammark, how do you calculate how much that 100% dividend actually comes out per share? Anyone actually recieved any dividend here? How much was it per share, I am curious to know.

If the stock's face value is Tk.10 (regardless of the fact that the share is probably trading at say Tk.80), then they issue a Tk.10 dividend on that share (i.e 100% of the face value). A 100% dividend could also come in the form of a bonus share, but this is usually not the case, as they'd rather issue a bonus share at 25% of face value... i.e 1 share as dividend for every 4 shares that you own.

Regarding dividend, why would declaring dividend drive up the price of the stock? If you are thinking this way, sounds like a classic "pump and dump" scenario in Bangladesh.

The expectation of a dividend declaration drives up the price of the stock. People want to buy like crazy so that they get their hands on the share, for that measely taka 10 coming into their pockets per share. for example: They figure that by buying X amount of stock, they'll actually come out on top with 10x amount of dividend income, and they set a sell order after the dividend is declared and being processed, at a price slightly higher than which they bought, so that they have a net gain. Added to that, since they're all trading on margin, their ROI is actually supposed to be higher if all goes well. But then thats where the flood of sell orders come in and the price falls faster than anticipated in a sellers market. At least this is what applied finance tells us.

However in elementary finance you'll know that there is a negative correlation between dividends and earnings. ie, the more the companies distribute dividends, the more their retained earnings are running out of cash. Ultimately this is a loss in the value of the company.

Secondly, Bonus shares further dilute the price of the stock, as company value then gets divided by a greater number of shares. i.e EPS goes down.

If you read up on "efficient market model" you'll see that stock markets can be categorised as very efficient, moderately efficient and weak forms. Bangladeshi stock exchanges miss the mark for being a weak form by a huge margin. On the bright side, thats what gives you the opportunity for windfall gains from the stocks. Go figure!

[Orpheus]

Originally Posted by ammark
If the stock's face value is Tk.10

Where can I find the face value of a company share? Is it on DSE website?

The expectation of a dividend declaration drives up the price of the stock.

Yeah I understand that...that's why I said it is similar to pump and dump scenario where you sell at the news.

But to get the dividend, wouldn't you have to hold the share for certain amount of time or is it whenever they declare is the day they disburse the dividend? I am asking because it would only make sense to buy the shares if pumpers were dumping it after the the declaration... because now you would get more dividend for your money.

But then there will be a nosedive after the disbursement.. LOL.

[ammark]

Originally Posted by Orpheus
Where can I find the face value of a company share? Is it on DSE website?

Not sure. afaik, the minimum share value by law so far is Tk.10. GrameenPhone wanted to issue Tk.1 face value shares, but the SEC here has ruled against it a few days ago.

Yeah I understand that...that's why I said it is similar to pump and dump scenario where you sell at the news.

But to get the dividend, wouldn't you have to hold the share for certain amount of time or is it whenever they declare is the day they disburse the dividend?

again, I'm not sure about this, but afaik you have to hold it for a certain period... the period being from anytime before the dividend is declared (as long as you hold it at point of declaration), to the point where the dividend is being processed & the company finalises the list of shareholders to distribute the dividend to (usually more than a couple of weeks). After your name gets on the list, you're pretty free to sell.

[if this isnt how it works, then can someone please clarify how this works out here in BD? Thanks]

But then there will be a nosedive after the disbursement.. LOL.

As for pump-and-dump, yeah it happens VERY often. The impact is compounded by rumour-mongering and speculation. But short selling isnt allowed here, so you cant really make money out of declining prices and it doesnt exacerbate the declines in prices further.

Btw, I wrote all this assuming its for a cash dividend. I dont know about stock dividends - what the holding rules and period is, but the process ought to be same. I remember my father buying a lot of shares last year basing his calculations on the fact that he'll get another share as dividend... and if he could sell all those shares afterwards at a slight markup on what he spent buying in, he'd still make a good profit. I dont know whether he was successful in this or not.

I'm not a big fan of dividends anyway because logically all that its doing is reducing your asset value big time. Others argue that in such an immature market, dividends are the only way you can entice individual retail investors into investing in the capital markets.

[Orpheus]

Originally Posted by ammark

I'm not a big fan of dividends anyway because logically all that its doing is reducing your asset value big time.

Yeah you are right. Usually a mature company would give dividends when they see there is no more room for growth. A growing company (growth stock) should never give out dividends, which begs the question - if Bangladesh is an emerging market, majority of the stocks should be growth stocks - then why people worry too much about dividends, I don't know. Why even invest in a shaky market like that if "income" (from dividend) is your foremost priority.

[Orpheus]

Originally Posted by ammark
As for pump-and-dump, yeah it happens VERY often. The impact is compounded by rumour-mongering and speculation. But short selling isnt allowed here, so you cant really make money out of declining prices and it doesnt exacerbate the declines in prices further.

In US, SEC is reviewing the rules for short selling and will decide if they would want to change anything this wednesday. While I don't like like short sellers in a down market, I think ability to short is a very important to keep prices in check. I think in Bangladesh there should be short selling precisely so this "pump and dump" technique has an upward cap to it.

[i_1_primeval_man]

Orpheus Quote:

"But to get the dividend, wouldn't you have to hold the share for certain amount of time or is it whenever they declare is the day they disburse the dividend? I am asking because it would only make sense to buy the shares if pumpers were dumping it after the the declaration... because now you would get more dividend for your money.

But then there will be a nosedive after the disbursement.. LOL. "


From what i understand, there are two dates for dividend distribution - i) dividend execution date and ii) dividend payable date. You just have to have a settled buy order before or on the execution date to be eligible to receive the dividend and you can sell it even before the payable date. The person who buys it before the payable date won't get the dividend and these two dates are usually separated by a couple of weeks. Atleast, this is how it works in the ASX.

[ammark]

Originally Posted by i_1_primeval_man
From what i understand....

Yeah its the same system here. The terminology is whats a bit different. Here's how it goes in Dhaka:

1. Company has a dividend declaration date. On this day they'll announce what the dividends are.

2. After a few days (I think 3-4 days) they have the "record date". Up to this date you can still buy shares of the company to get on the dividend recipients list.

3. Then after a few weeks they have the AGM... at the AGM they'll disburse the dividends. You have to hold on to your shares till the AGM essentially.

[samircreep]

Historically speaking, whenever companies declare even semi-decent dividends, theres a mad rush to grab a hold of those shares. This is the first time in dse history where i see companies declaring amazing dividends and even then share prices are actually falling substantially. Amazing, really.

By the way, does anyone have mutual funds? I have a 1000 shares of Grameen 2. I just heard an interview on ETV where this dude was saying theyre gonna be the next big thing.

[samircreep]

Just look at the bank stocks soar!

[Equinox]

The DSE trading crossed Tk. 1000 crore for the first time a few days ago.

Here is a link to a report on The Daily Star today about a recent incident of trading irregularity involving a company owned by Bangladesh's largest corporation and two top banks. No prizes for guessing which businessman was involved in this:
http://www.thedailystar.net/newDesig....php?nid=96240

[SS]

http://finance.yahoo.com/tech-ticker/there's-%22genuine-concern%22-but-emerging-markets-still-look-good-ft-'tilt'-editor-says-535814.html;_ylt=AiNF338UBQzgRE7DdadRMhhO7sMF;_ylu =X3oDMTE1ZW05cjVjBHBvcwM3BHNlYwN0ZWNoVGlja2VyBHNsa wN0aGVyZXNnZW51aW4-?tickers=EWY,EEM,EWZ,EPP,EWT,AAPL,FXI#mwpphu-container

Recent issue reviewed by experts in Stock Exchange dip in BD stock Exchange

[ammark]

Thanks for the vid SS bhai. I doubt this vid will suddenly trigger capital flight from foreign investors, simply because the number of foreign funds invested in Bangladesh is relatively few. They manage big sums, but the number of funds here are low. They're essentially punting for the corporate and institutional investors abroad.

MSCI's BRIC Top 50 index is heavily weighted by Chinese stocks, and very few Indian stocks to be honest. Most retail investors abroad would likely follow that index, or let their brokers/mutual funds invest in some Emerging Markets fund. Exposure from Bangladesh ultimately will be minimal for them.

But there is still the real risk of a slowdown in foreign funds coming in the more headline grabbing "riots" we have. The DGEN is volatile - after rising 80% in 2010, it fell 20% in one day, and then rose back 15% the next day. Many traders make most of their money from these swings. As long as there is greed in the world, we'll have money coming in.

[auntu]

DSE has closed the ETV's DSE studio by force. ETV is the only channel who is showing live dedicated program for share market and it's very famous amongst viewers.

Source: ETV news

[view360]

'The Royal Dhaka Casino' would be the proper name instead of DSE.

[thebest]

The Dhaka and Chittagong Casino has been closed again

[Shubho]

I am willing to wager than 95% of the companies listed on either the DSE or CSE would not qualify for a listing on any other stock exchange in the world.

[Puck]

I thought the following picture might inspire some of you to keep away from stocks and shares -

http://www.independent.co.uk/article806086.ece