Bangladesh:Textile shares go high despite slow export

Giving no attention to the fundamentals of the listed companies and the gloomy global reality, the market value and the volume of textile shares at the Dhaka Stock Exchange have posted an unusual rise in the last three months.
Share market and textile industry insiders believe there is something fishy in trading of textiles share otherwise, they say, this sector should not be so active on the stock market. The latest performance of the textile companies and their positions at the domestic and the international markets have also support this suggestion.
According to a Dhaka Stock Exchange report, market capital of this sector increased by 32 per cent to Tk 2,057 crore in the last three months when only one new issue was listed.
The DSE report showed that the turnover increased rapidly in February to Tk 209.6 crore from January’s Tk 205.6 crore from only Tk 43.2 crore in December last year.
Only a few of textile stocks, however, became pricey over the time on some grounds but prices of many issues those were undervalued or were inactive in the previous months, increased sharply beyond their market fundamentals.
Among the A-category companies — those declare regular dividends — shares, prices of Squaretex increased by 5 per cent, Bextex 32 per cent and Metro Spinning 86 per cent between December 1 last year and February 26 of the current year.
But some companies listed in B-category — not good, not bad but are operational and pay some dividends — increased sharply. In this category, share prices of Dulamia cotton — a spinning unit — increased by 84 per cent, Safco Spinning 122 per cent and Monno Fabrics — a composite textile weaving and dying unit — by 90 per cent.
And surprisingly, almost all Z-category textile stocks, most of which are non-operational or showed operational losses for years, marked sharp rise during this period.
According to the DSE, out of 34 listed issues from textile sector, 12 are listed in A-category 8 in B-category and 14 in Z-category.
The DSE records show market value of Z-category Dynamic Textile increased by 148 per cent, M Hossain Garments 86 per cent, Mita textile 54 per cent, BD Sajib Knitwear 40 per cent, when Sreepur Textile — a closed spinning unit — became dearer by 78 per cent.
A Matin Chowdhury, a former president of the Bangladesh Textile Mills Association, says the textiles industry have been facing huge difficulties for the past three months or so.
‘The declining demands at the overseas market have forced many textiles and spinning units to cut their productions that subsequently reduce income and profits. It will be difficult to help survive the industry if this declining trend continues,’ said Chowdhury who admits that he does not understand the reasons behind the sharp rise of textile shares.
Matin, also a sponsor director of Rahim Textile, an A-category issue at the DSE, recalls that his shares traded at around Tk 380 in early December but rose to Tk 675 this month. ‘Our unit has some expansions which may influence its prices, but honestly I do not understand how stock market behaves here.’
Robust growths on knitwear exports last year, kept the local spinners and fabric dyers overbooked, but global depression cut down orders that triggered difficulties to the spinners.
Yawer Sayed, managing director of the asset management company AIMS says bourses here deny market fundamentals and so does the textile sector.
He says investors’ recent attention to Z-category shares contributed to rise of textile stocks as textile issues dominate the domain of infamous category.
The SEC recently alerted sponsors of Z category companies to make improve performance or face penalties.
Sayed, however, pointed out that good performance of a newly-listed Makson-a spinning unit and investors’ attention to Beximco textile also contributed to the increased turnovers and market capitalisation of textile sector.

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Source: NEwage,Dhaka