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Ctg bourse launches two new indices

Muhammad Abdul Mazid, chairman of Chittagong Stock Exchange, attends the launch of two new indices at the CSE office in Dhaka yesterday. Syed Sajid Husain, managing director, was also present. Photo: CSE/Daily Star

Muhammad Abdul Mazid, chairman of Chittagong Stock Exchange, attends the launch of two new indices at the CSE office in Dhaka yesterday. Syed Sajid Husain, managing director, was also present. Photo: CSE/Daily Star

The Chittagong Stock Exchange yesterday launched two new indices to attract more local and foreign investors by providing a clear picture of the market.

Each of the indices — CSE 50 Benchmark Index and CSE Shariah Index — will have a base of 1,000 points.

Developed by India Index Services and Products Ltd, the indices can be utilised by investors to track the performance of the market and shariah-compliant securities, said Muhammad Abdul Mazid, chairman of the bourse, at a launching programme at the CSE office in Dhaka.

Corporate bonds, mutual funds and securities that are classified under the ‘Z category’ are not eligible for the indices.

Investors can invest transparently and judiciously, following the new indices, Mazid said. The new indices will help start a derivatives market in future, he added.

A derivative is a financial contract between two parties, whose value is based on, or ‘derived’ from the performance of underlying assets such as stocks, bonds, commodities, interest rates and exchange rates.

The indices will create a new investment opportunity with proper representation of the market, said Syed Sajid Husain, managing director of the CSE.

The CSE 50 index has been constructed to provide an appropriate benchmark for the capital market, he said. The index consists of 50 leading and active stocks to ensure coverage of a large portion of market capitalisation in the CSE, he said.

The CSE 50 stocks represent about 66 percent of total market cap and around 65 percent of the float-adjusted market cap of CSE listed companies, which make the index representative of the overall economy, he said. The index will cover 13 sectors of the economy.

The index has been calculated since July 2009 and is well suited for benchmarking, index funds and index-based derivatives, Husain said.

The top ten companies in the CSE 50 index are: Square Pharma, Grameenphone, British American Tobacco Bangladesh, Beximco, Titas Gas Transmission and Distribution Company, Beximco Pharma, Islami Bank, Pubali Bank, Olympic Industries, and United Commercial Bank.

Only tradable shares are taken into account to calculate the index.

The methodology also takes into account constituent changes in the index and corporate actions, such as stock splits and rights issuance. The index will be reviewed every six months.

It gained 30.21 points, to close at 1,024.06 points yesterday. The CSE also engaged the services of India-based Taqwaa Advisory and Shariah Investment Solution (TASIS) to design the underlying shariah framework of the index, a process that took six months to complete, Husain added.

TASIS formulated the framework using data spanning over five years of the companies listed in the Bangladesh capital market, he said.

TASIS excluded companies involved in noncompliant business, such as financial services, tobacco, alcohol, pork, vulgar entertainment, and manufacturer of explosives.

Stocks under the CSE shariah index represent about 48.6 percent of total market cap and around 41.35 percent of float-adjusted market cap of the CSE listed companies.

The CSE shariah index covers 17 sectors of the economy and will be reviewed once every year.

The top ten companies in the CSE shariah index are: Square Pharma, Grameenphone, Lafarge Surma Cement, Beximco, Islami Bank, Olympic Industries, Heidelberg Cement, Summit Power, Al-Arafah Islami Bank, and Export Import Bank. It gained 12.96 points, to close at 1,105.54 yesterday.

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Source: Daily Star

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