The Small and Medium Enterprise (SME) Board index of the Dhaka Stock Exchange (DSE) has experienced a significant drop over the past year. As of Monday, August 18, the index decreased by 27 percent, or 345 points, bringing it down to 950 points, which is below its base level of 1,000 points. This marks a substantial correction for the sector following the political unrest in August of the previous year.

The primary cause of this decline was a steep drop in the share prices of 15 out of the 20 listed SME stocks. Market analysts indicate that this decline was unavoidable, as the price increases of these companies were artificial and did not reflect their actual earnings or performance.

Launched in September 2021, the board’s index had peaked at 2,244 points in August 2022, driven by speculative trading. However, from August 19 of last year to August 18 of this year, the prices of SME stocks have plummeted between 3% and 76%. Consequently, the market capitalization of the SME board has decreased by over Tk 10 billion, now standing at Tk 19.23 billion.

In contrast, the DSE’s main board index has only dropped by 6% during the same timeframe. Additionally, its market capitalization has risen by Tk 154 billion, attributed to the increase in share prices of several large-cap companies.

Previously, stocks such as Yusuf Flower and Himadri, which contributed to the rise of the SME index, have faced considerable declines over the past year. Yusuf Flower’s share price fell by 67% to Tk 2,018 on Monday, down from Tk 6,137 a year ago. Similarly, Himadri’s share price has decreased by 53% to Tk 1,022.

Market experts attribute this unusual price surge to speculative behavior and rumors. Last year, the share prices of these two companies reached levels that surpassed even those of many companies in the main market that offer substantial dividends.

In July of last year, the Bangladesh Securities and Exchange Commission (BSEC) imposed fines totaling 1.7 million taka on four individuals and three institutions for manipulating Himadri’s shares.

Khandaker Rashed Maqsood began implementing stringent measures against irregularities following his appointment as the new BSEC chairman on August 18 of last year.

Market insiders report that the commission’s firm stance has instigated panic among manipulators, prompting many to sell their shares.

The new commission is currently focused on promoting transparency and accountability within the market, while also striving to hold those responsible for irregularities accountable.