Bangladesh plans mass privatisations to cool stock market

DHAKA: (AFP) - Bangladesh will offload stakes in dozens of state-owned enterprises as part of a major government effort to cool down the country’s overheated stock exchange, its finance minister said last week.

Eight state-owned firms, including major energy and power firms, which are already listed will be made to sell more shares, while 24 wholly state-owned firms will be taken public this year, A.M.A. Muhith told AFP.

The moves aim to help the Dhaka Stock Exchange (DSE) soak up excess demand for stocks, which analysts say has pushed valuations to unsustainable levels.

Muhith said the government has eased rules for issuing new shares to encourage the 24 state-owned companies to list.

The DSE, which is up 70 percent since the start of the year, crossed the record 8,000-point mark during trading on Sunday before falling 12 points to close at 7,988 on profit taking. It closed at 7,974 on Monday.

Titas, the country’s largest gas distribution company, electricity giant Desco, mobile phone company Teletalk and national flag carrier Biman Air top the list of companies to be listed this year, the DSE said.

“It’s the biggest bonanza for the country’s share market in decades,” DSE director Rakibur Rahman told AFP, adding that the last time the government took similar steps was in 1988, when eight small state-owned enterprises were listed.

“It will stabilise the market by narrowing the dangerous demand and supply gap,” he said.

The sale of stakes in the eight main companies will raise up to 600 million dollars, with listing of the additional 24 companies likely to net some 850 million dollars, he said.

The DSE has been the top performing share market in the region since 2007. Its benchmark DGEN index has risen nearly 200% since January 2009.