DSE Z-Category Risk Tracker

What is Z-Category in the Bangladesh Stock Market?

On the Dhaka Stock Exchange (DSE), companies are categorized into A, B, G, N, and Z based on their performance and regulatory compliance. The Z-Category (often referred to as "Junk Stocks") is the lowest tier, reserved for companies that fail to meet basic requirements.

Why are stocks moved to Z-Category?

A company is typically demoted to Z-category if it:

• Fails to declare any dividend for two consecutive years.
• Fails to hold its Annual General Meeting (AGM).
• Remains out of production or operation for six months or more.
• Has accumulated losses exceeding its paid-up capital.
• Violates significant BSEC or DSE listing regulations.

Restrictions on Z-Category Stocks

Trading Z-category stocks comes with several regulatory hurdles designed to protect investors from excessive speculation:

• Settlement Cycle: Unlike standard T+2 stocks, Z-category trades are settled on a T+3 basis.
• Margin Loans: These stocks are strictly non-marginable. Brokers cannot provide loans to buy Z-category shares.
• Circuit Breakers: The daily price fluctuation limit is often reduced (usually to 3-5%) compared to the standard 10%.

Can a company recover from Z-Category?

Yes, many companies have successfully returned to the A or B category. This usually happens after a change in the Board of Directors, a successful capital injection, or restarting production. Investors often look for these "Turnaround Stories," but they represent a high-risk, high-reward bet.