Prices of 42 percent securities have gone down below their face value, which the market analysts believe reflection of a dismal state of the secondary market.

As many as 111 companies and mutual funds, out of the total 260 listed in the country's two stock exchanges, are experiencing such a low level in their share prices.

Market players blamed poor financial performance of the companies, most of which belong to Z category, and low confidence of the investors for the price slump.

But the list of these low performing companies also includes some from A and B categories which is quite unusual, they said.

Seventy out of 93 securities in Z category, twelve out of 127 in A category and 29 out of 39 securities in B category are sold at prices below their face value.

A category companies pay dividend at a rate of over 10 percent and B category companies pay under 10 percent. And the companies, which do not pay any dividend, fall under Z group.

Analysts say price decrease of such a large number companies discourages people to invest in secondary market and project a negative image of the stock market.

The undervalued A category securities are 1st BSRS Mutual Fund, AIMS 1st Mutual Fund, Beach Hatchery, Beximco Denims, Beximco Synthetics, Beximco Textiles, Himadri Ltd, Delta Millers, Eastern Housing, Keya Detergent, Miracle industries and Sinobangla industries.

When asked for his comment, Securities and Exchange Commission Executive Director Mansur Alam said this is a warning for the investors.

"As the companies perform

poorly in terms of corporate incentives, investors lose interest and confidence in the securities leading to the price fall below face value," he said.

Though these companies shock both the market and investors, the regulators have little to do in improving the situation. Considering the investors' interest, regulators cannot delist the companies performing poorly, he added.

However, trading of some of the undervalued companies remained stopped since December last year as the regulators suspended them following abnormal surge of price without any corporate disclosure by the companies.

The companies are Karim Pipe, Dhaka Vegetable, Paragon Leather, National Oxygen, Gem Knitwear, Therapeutics, JH Chemical, Mark Bd Shilpa, Texpick Industries and Meghna Vegetables.