The Dhaka Stock Exchange (DSE) experienced major disruptions yesterday due to a technical glitch, which sent indices into disarray, leaving investors in the dark about the market trend and heavily impacting turnover.

The daily turnover at the country’s premier bourse plummeted by 32%.

Errors stemmed from inaccurate data input from the index management department of the DSE into the trading system while adjusting the share price of Aamra Network following the issuance of rights shares, according to exchange officials.

ATM Tariquzzaman, managing director at the DSE, told The Business Standard that while there have been several technical glitches in the exchange before, this is the first instance of a glitch occurring during the adjustment of a company’s share price.

“Due to incorrect data input from the index department in the software, problems have arisen in the index calculation system. Our IT department is currently in contact with the software provider Nasdaq to resolve this issue,” he added.

The DSE website showed at 10:10am that the benchmark index had dropped by 6,123 points or 99.99% from the previous day.

It also showed that within the first 10 minutes of the exchange’s opening, shares of 226 companies had already been traded, with 159 stocks witnessing an increase.

It’s noteworthy that DSE manually inputs information into the trading system.

“We often overlook precautions when trading proceeds smoothly, but whenever issues arise, we scramble.” Professor Mohammad Kaykobad, Computer science department at Buet 

As soon as the DSE learned about the technical issue, it reset all indices to zero. Additionally, on its website, the exchange issued a notice stating its inability to display index changes due to technical errors and requesting investors not to panic.

The benchmark index showed a negative 5,971 points, or 97.68%, down at the end of the trading session.

Although the index showed unusual data throughout the trading hours, the DSE website showed that after evening, DSEX declined by 37.52 points to settle at 6075, the DS30 index fell by 10.47 points to 2083, and the DSE Shariah index fell by 10.93 points to settle at 1322.

ATM Tariquzzaman said at 7:30pm, “It has not been possible to fix it completely yet. Efforts are on to solve it in collaboration with Nasdaq. The problems will be resolved after the exchange gets ready for transactions on Monday.”

Professor Mohammad Kaykobad, from the computer science department at the Bangladesh University of Engineering and Technology, said, “We often overlook precautions when trading proceeds smoothly, but whenever issues arise, we scramble.”

“In such instances, we should maintain constant vigilance for potential glitches. A simple technical malfunction can lead to significant financial losses for investors,” Kaykobad, also a former director of the DSE, told TBS.

According to the DSE, the technical glitches are not the first. Owing to the glitches, in October 2022, the DSE halted trading for more than three hours.

BSEC ordered DSE’s Chief Technology Officer Md Ziaul Karim on compulsory leave due to technical problems.

The post of CTO has been vacant since then. General Manager Md Tariqul Islam is performing the duty of acting CTO. Not only had those glitches, but on a bullish session on July 18 July 2021, user overload triggered a standstill of the DSE trading engine that resulted in a 111-minute halt.

On 19 March 2020, the bourse had to start trading at 2pm for half an hour as it was struggling to adjust the bottom circuit breaker that suddenly changed due to the unforeseen imposition of the floor price for individual scrips in the evening.

Meanwhile, trading at the Chittagong Stock Exchange remained normal.

Steps taken 

DSE has constituted a three-member inquiry committee to look into the cause of the technical glitch, which has been asked to submit a report within the next three days.

Sattique Ahmed Shah, chief finance officer of the DSE, has been made convener of the inquiry committee.

Besides, the Bangladesh Securities and Exchange Commission (BSEC) has also set up a two-member inspection team. The committee members spoke to the departments concerned and officials of DSE on Sunday.

The committee has been asked to submit its report within the next three days.

DSE suspends Aamra Networks trades

The DSE suspended the trading of shares of Aamra Networks on Sunday.

Also, the exchange cancelled all of Sunday’s executed trades for the company.

The trade suspension was for the greater interest of the capital market and to ensure proper representation of DSE indices, says the DSE on its website.

The Dhaka bourse said the trading of Aamra Networks will resume on Monday after taking corrective measures.

It also said indices were showing some unusual figures while taking corporate action for the rights entitlement of Aamra Networks in the system due to an operational error.

The floor price restriction for British American Tobacco (BAT) Bangladesh stock is set to be withdrawn on 4 March, as stated by the Bangladesh Securities and Exchange Commission (BSEC).

In a directive issued on 6 February, the market regulator said the floor restriction for BAT Bangladesh shares would be removed the day after the record date, scheduled for 3 March.

The floor price is the lowest price set by the securities regulator at which a stock can be traded. In January this year, the commission lifted the restriction for most stocks 18 months after its enforcement.

Currently, BAT Bangladesh shares have been stuck at the floor price of Tk518.70 each at the Dhaka bourse since September 2022.

BAT is currently recognised as the second-largest company in terms of market capitalisation, representing 6.55% of the Dhaka Stock Exchange’s total valuation. The tobacco company’s current total market cap stands at Tk28,000 crore.

On 8 February, BAT Bangladesh declared a 100% cash dividend to its shareholders for 2023, marking the lowest dividend in over a decade.

The multinational tobacco manufacturer reported a profit of Tk1,788 crore in 2023, a marginal increase from Tk1,787 crore in 2022.

Despite the similar profit, the company declared a dividend, representing only 30% of last year’s total profit. This marks a significant decrease from the 200% cash dividend payout in 2022.

While dividend data for BAT Bangladesh was not available before 2010, the company was known for announcing generous dividends over the years.

As per the disclosure, it reported earnings per share of Tk33.11 in 2023, a marginal increase from Tk33.10 in the previous year.

BAT Bangladesh is scheduled to convene its annual general meeting on 28 March.

The cigarette manufacturer operates factories in Dhaka and Savar, along with a green leaf threshing plant in Kushtia and a green leaf re-drying plant in Manikganj.

Over the past three years, the company has invested more than Tk1,200 crore in various phases to enhance its production capacity and meet the growing demand.

BAT Bangladesh has yet to publish detailed annual financial statements. However, based on available data, the company’s net turnover for the first nine months of 2023 grew by 10%, reaching Tk6,793 crore.

During the same period, domestic cigarette sales witnessed a 10% year-on-year increase, totalling Tk6,493 crore. Additionally, leaf exports surged by 16%, amounting to Tk30 crore during the January-September period of 2023.

BAT exports cigarettes to various countries, with notable markets like China and the Maldives. China, being a significant market for cigarettes, contributes substantially to the company’s global exports.

In addition to cigarettes, BAT also exports tobacco green leaf to a range of countries, including Belgium, Spain, the Netherlands, Turkey, the United Arab Emirates, Germany, the UK, the United States, and South Africa.

The claims settlement ratio for life insurance companies in the country has reached 72% in 2023, marking a significant 5.03% increase compared to the previous year.

The sector saw improvement in claims settlement ratio due to various initiatives undertaken by the Insurance Development and Regulatory Authority (IDRA), said its chairman Mohammad Jainul Bari at a press conference in Dhaka on Wednesday (28 February) on the occasion of National Insurance Day to be observed on 1 March.

He further announced that Prime Minister Sheikh Hasina will be chief guest at the official programme to be observed to mark the day on 1 March, with Finance Minister Abul Hassan Mahmood Ali in the chair.

Jainul Bari said “Life insurance companies paid Tk8,754 crore out of a total claim amount of Tk12,117 crore in 2023. This translates to a claims settlement ratio of Tk72 for every Tk100 of claims received.”

“To brighten up the image of the insurance sector, the authorities have been directing the insurance companies to give utmost importance to the payment of insurance claims.”

Mohammad Jainul Bari, Chairman, IDRA

The term “claims settlement ratio” refers to the percentage of claims resolved by an insurance provider during a year out of the total claims received. This metric reflects an insurer’s credibility by comparing successful claims resolutions to total customer requests.

In 2023, the claims settlement of the insurance sector rose 4% compared to the previous year, the IDRA chairman said.

He mentioned that 82 authorised insurers are now providing insurance services in the country. Currently 1.71 crore people of the country are covered by insurance. “To brighten up the image of the insurance sector, the authorities have been directing the insurance companies to give utmost importance to the payment of insurance claims,” the IDRA chairman added.

“Corporate Governance Guidelines 2023 and Regulatory Sandbox Guidelines have been issued to modernise the country’s insurance system. Bancassurance has been introduced to market insurance products through banks which will be inaugurated by the PM on Insurance Day. Already five banks have signed an agreement in this regard,” he said.

The IDRA chairman said 19 life insurance companies paid claims around 80–90% while 10 companies paid 70% of claims. “The rest of the companies could not pay claims properly as they were unable to pay. Here, the regulator could not do anything,” he added.

Jainul Bari said IDRA is working with microcredit authorities so that more people are included in the insurance sector. “Besides, numerous tools are pending like solvency margin regulation and risk-based supervision. If it is possible to run these tools, it will play a vital role in building confidence in the insurance sector.”

Industry insiders say a few years ago, the companies used to spend excessively to increase business procurement.

“For instance, to bring fresh Tk100, we used to spend Tk120. This is why it was difficult for life insurance companies to build adequate life funds to meet the claims of policyholders back then,” a senior official told TBS.

Infographic: TBS

NRB Bank is set for its trading debut on the country’s stock market on Tuesday, with investors anticipating significant returns from the very first day.

The fourth-generation bank, with the majority of its shares owned by non-resident Bangladeshis, will enter the capital market with a face value of Tk10 per share.

The managing director at a brokerage firm told The Business Standard that the private sector lender witnessed a remarkable response to its initial public offering (IPO) subscription, with the subscription amounting to 3.91 times higher than the allocated shares.

He also noted that investors have received favourable returns from recent IPO shares like Best Holdings and Sikder Insurance. As a result, investors are expecting promising returns from NRB Bank shares as well.

General investors were allotted 255 primary shares in NRB Bank, while non-resident Bangladeshis received 209 shares against a Tk10,000 deposit.

Earlier, on 9 November, the bank received approval from the Bangladesh Securities and Exchange Commission (BSEC) to raise Tk100 crore.

The lender plans to invest Tk92 crore in government securities, Tk4.17 crore in the secondary market, and the remainder to cover IPO expenses.

However, other fourth-generation banks that were listed in recent years failed to meet investors’ expectations, as they did not generate significant returns from their IPO shares.

Global Islami Bank and Union Bank are currently trading below their face value of Tk10 each, while Midland Bank, SBAC Bank, and NRB Bank shares are hovering between Tk12 and Tk14.

What EBL Securities says

One of the leading brokerage firms, EBL Securities, published a report on the financial strength of NRB Bank on its website on 25 February.

The broker noted that NRB Bank exhibited a 5-year compound annual growth rate (CAGR) of 16% in loans and advances and 18% in deposits from 2018 to 2022.

These figures surpass the industry average of 12% for loans and 10% for deposits, indicating the bank’s strong performance in deposit mobilization and loan disbursements.

The bank has the potential to further enhance its interest rate spread and net interest margin by strategically minimising the cost of funds, the report added.

But investors have concerns about the bank’s profitability due to surging non-performing loans.

The EBL Securities report highlighted a potential concern for investors, noting that the non-performing loan ratio of the bank rose significantly to 6.1% by September of last year, compared to 3.2% in 2022.

Furthermore, the report emphasised that the return on assets and return on equity of the bank are considerably lower than the industry average. This suggests that the bank has encountered notable challenges in effectively utilising its assets to generate satisfactory returns for its stakeholders.