Stock markets in the country were nervous and divided in 2015 as to how deep the correction should go or what level is the best to buy.
In many cases, investors lost money on their investments as the markets ended the year lower than they started.
The markets which had been on a recovery mode in previous two years witnessed a reverse trend in 2015 when DSEX, the main gauge of Dhaka Stock Exchange, dropped more than 6%.
The markets’ poor performance can be attributed to the political turbulence, law and order situation, vulnerable macro economy and continuous effect of late 2010 market crash, analysts say.
“The market was nothing but on a wild ride all the year,” said Shahidul Islam, chief executive officer at VIPB Asset Management Company.
“If you look at the graph, the DSEX had neared 5,000-mark in the beginning. Then it declined to 4,000-mark and again climbed to 4,800-mark before hovering around 4,600-mark at the end of the year.”
Assessing the performance of the market, former finance adviser to the caretaker government Mirza Azizul Islam said: “Despite positive measures like lowering tax for listed companies and beginning trial of the market manipulators in the year, investor confidence was not boosted because macroeconomic signal was not strong.”
“Investor investment depends on the company’s profits. The higher profits ... the higher returns. But the last year corporate earnings that were affected by the political turmoil failed to satisfy investors.”
IDLC Investments Managing Director Md Moniruzzaman said a lot of factors, particularly political turmoil in the first quarter of 2015, and continuous effect of market crash, affected the market negatively.
“That is why some recovery made in 2013 and 2014 was not sustained in 2015.”
The bottom line is that the market witnessed mostly weak shares in 2015, some of which went below their offer values, contributing to the confidence erosion, he said.
“Initial hype on debut date could not be sustained for the IPOs. One major reform in the year is that all premium IPOs will have to follow book building route going forward.”
The lenders’ equities are yet to come out from the red that went during the market crash, he said.
Analysts believe that fragile macroeconomic performance and political uncertainty might continue to rock the boat of the bourses in the New Year.
“I do not think a big turnaround in 2016,” said Islam, also former chairman of Bangladesh Securities and Exchange Commission (BSEC).
He said of the notable factors, political risks and law and order situation are the ones, which might continue to put adverse impact on private investment in the New Year too.
VIPB CEO, however, is hopeful that 2016 will be better than 2015, because of higher liquidity and lower commodity prices in the global market.
“But everything depends on political situation.” In the same breath, the IDLC Investments managing director said: “The private investment might fail to pick up until political concerns are at rest.”
A stock trader Ismail Hossain who entered the market last year to avail the lower prices faced losses instead.
“I bet on stocks in the past year taking opportunity of lower prices, but I have lost 25% of my investment.”