DSEX, the benchmark index of the Dhaka Stock Exchange, started the year on an unremarkable note but is ending it on a high
Morning shows the day, so says the proverb, but this does not hold when it comes to the performance of the country’s premier bourse this year.
DSEX, the benchmark index of the Dhaka Stock Exchange, started the year on an unremarkable note but is ending it on a high.
The key index gained 21.3 per cent, which is one of the highest in the world, despite the 66-day recess for the countrywide general shutdown to slow the spread of coronavirus, according to EBL Securities.
Like markets all over the globe, Bangladesh’s bourse went on a tailspin just as coronavirus was putting down its roots everywhere.
To stop the bloodbath, the Bangladesh Securities and Exchange Commission in March put a new floor price on all stocks.
But a few days later, the market went into recess only to open in May with a new commission in charge.
“The new commission gave hope as they took steps to improve the governance,” said Md Moniruzzaman, managing director of IDLC Investments.
Headed by Shibli Rubayet ul Islam, the new commission straight away got down to cracking down on junk stocks, narrowing the avenues through which market manipulators operate and tightening the noose on listed companies such that they stayed in order.
Not that it succeeded entirely, but it acted with an assuredness and resolve that was not seen before.
Besides, Bangladesh’s corporate world rebounded faster than elsewhere as people became habituated with the new normal way of living, according to Moniruzzaman.
Subsequently, there has been a significant improvement from the rock-bottom in March, when Covid-19 fear gripped the nation and the world, he told Dhaka Tribune yesterday.
“It was a market for those who wanted to participate,” said Shaikh Shamsuddin Ahmed, BSEC commissioner.
And investors participated in droves.
The average daily turnover stood at Tk 648 crore this year, up 35.1 per cent year-on-year, bucking the trend of negative growth seen in the previous two years.
The market capitalisation soared 32 per cent year-on-year to Tk 448,230 crore -- the highest yet -- on the back of higher prices of stocks and the debut of heavyweight companies Robi and Walton.
Meanwhile, foreign investors' transactions in the Dhaka bourse increased to Tk 10,387 crore, which is 7.7 per cent of the total transactions at the Dhaka Stock Exchange in the year.
In 2019, foreign investors' transactions stood at Tk 7,845 crore, which was 6.9 per cent of the total transactions at the bourse that year.
“The new commission provided trust to the investors. It has paved the way for millions more investors in the coming year to be successful,” Ahmed added.
The BSEC has taken a lot of regulatory action and corrective measures, which gradually restores investors’ confidence in the market, said Azam J Chowdhury, president of the Bangladesh Association of Publicly Listed Companies (BAPLC).
“If these measures are continuously implemented without prejudice, then 2020 will serve as a great inspiration for all stakeholders in the years ahead,” he added.
The new commission has been trying to bring order into the market with disciplinary action, a process that should be continued, said Abu Ahmed, an honorary professor at the Dhaka University’s economics department.
“The punitive measures have provided a great source of comfort to investors,” he added.
Subsequently, the investors continued their buying appetite on sector-wise stocks, said Mizan-ur-Rashid Chowdhury, president of the PujibazarBiniogkariOikya Parishad.
“Now, the affected general investors are getting their lost capital back,” he added.
The government’s stimulus packages to shore up the economy from the pandemic whiplash and the faster economic recovery have tempted the seasonal retail investors to pour fresh funds into the market, according to Mohammad A Hafiz, former president of the Bangladesh Merchant Bankers Association (BMBA).
The engineering sector, which comprises of 41 companies, generated the highest returns this year: 133.1 per cent.
It was followed by general insurance (97.5 per cent), miscellaneous (49.8 per cent), telecom (49.6%) and services (44.4 per cent).
The mutual fund sector, whose abnormal rise in recent months elicited a probe body from the regulator last month, came in next with a return of 38.9 per cent.
Associated Oxygen saw the highest gains this year: 453 per cent. Zeal Bangla, Walton and Asia Insurance rounded off the top five spots.
Standard Ceramics was the worst loser, shedding 54 per cent of value, followed by Northern Jute, Sinobangla, Samata Leather and Shurwid Industries.
Beximco Pharma generated the highest turnover of Tk 5,655 crore, which accounted for 4.6 per cent of the DSE’s total turnover. It was followed by its parent company Beximco, Square Pharma, LafargeHolcim and Brac Bank.
The new year promises to be a better one though, according to EBL Securities, thanks in part to the Covid-19 vaccine rollout and with it, the lifting of the pall of gloom brought on by the coronavirus pandemic.