Dhaka, Bangladesh (BBN)-The country’s prime bourse - Dhaka Stock Exchange (DSE) posted 14 percent year-on-year growth in the just concluding calendar year compared to previous year as investors found some ground.
Analysts said the Bangladesh’s stock market passed a relatively stable in 2014 compared to the last three years since the market debacle in early 2011 though it could not achieve the expected results.
Analysts believe investors would keenly follow the political developments in 2015. “This factor will remain a major market mover in the New Year,” they said.
DSEX, the prime index of the Dhaka Stock Exchange (DSE) -- the main gauge of the market - opened the year at 4,266.55 points and closed at 4,864.96 points on Tuesday, the last trading day of the year, gaining 598.41 points or 14.03 percent over the year, according to statistics from DSE.
The blue chip index DS30 and Shariah compliant DSES also returned 23 percent and 22 percent respectively during the year.
The daily turnover, the most important indicator of the market, stood at BDT 4.99 billion on average, up 24.75 percent year-on-year, according DSE statistics.
The market capitalisation rose 23.09 percent to BDT 3,259.24 billion end of the year compared to previous year while DSE market capitalisation to GDP was 24.12 against 25.51 in 2013.
AB Mirza Azizul Islam, former finance adviser to the caretaker government said, “It is a below expected performance for the stock market in 2014”.
“The key index of the Dhaka Stock Exchange (DSE) remained below 5,000-mark despite listing of 17 new companies in 2014 and turnover also did not reach a satisfactory level,” he said.
“Investors’ confidence is yet to be restored fully as institutional investors along with big ones remained mostly inactive,” said Mr Islam, also former chairman of the Bangladesh Securities and Exchange Commission (BSEC).
The prospect in the New Year depends mostly on the country’s political situation as well as country’ real sectors’ performance, he added.
A total of 17 new securities raised BDT 10 billion from public through IPO, including premium of BDT 5.50 billion in 2014. With inclusion of the new securities, 546 companies are now trading on the DSE.
Nine listed companies raised BDT 19.80 billion, including premium, in the outgoing year from the stock market through 775.31 million rights shares. Of them, the state-owned Investment Corporation of Bangladesh (ICB) raised BDT 10.55 billion alone.
The achievement of ‘A’ category has upgraded the status of the bourses to an international level, which also paved the way for attracting more foreign investors in the upcoming months, said an analyst.
Net foreign investment in stocks saw a 34.3 percent growth in 2014 compared to previous year, which indicates that the capital market is being viewed as a viable place for investment.
“Improved regulatory framework and oversight, positive macro variables, relative market valuation level and reduced systematic risk from political front were the cheering factors for foreign investors,” said Md Ashaduzaman Riadh, Strategic Portfolio Manager of LankaBangla Securities.
The overall price earnings ratio of the DSE stood at 17.77 in the just concluded calendar year against 17.17 in 2013, the DSE data showed.
One of the main focuses of the securities regulator was strengthening the enforcement activities. In line with this, the regulator took actions against the issuer companies, the issue managers and the auditors for their wrongdoings.
A new trading system, replacing the 16-year-old one, was introduced toward the end of the year, opening a window for a paradigm shift and has enhanced efficiency, transparency and technological integration.
The BSEC will also prepare a long-term guideline on IPOs and a national policy on financial literacy, and establish a separate clearing corporation.
Searching for strategic partners for demutualised stock exchanges, to bring state-owned entities including big companies in stocks market are still major challenges for stock exchanges.
BBN/SSR/AD-01Jan15-2:25 pm (BST)