Dhaka, Bangladesh (BBN)– The market capitalisation of Bangladesh’s premier bourse added BDT 615 billion in the just concluded fiscal year (FY) 2016-17 as investors were on buying spree amid optimism.
The total market cap of the Dhaka Stock Exchange (DSE) also touched all-time high of BDT 3,847 billion on April 4 during the fiscal year.
Between June 30, 2016 and June 29, 2017, the DSE market capitalisation added more than BDT 615 billion or rising 19 percent as investors continued to inject fresh funds into stocks amid optimism.
According to statistics from the DSE, the total market cap of the prime bourse was BDT 3,186 billion on June 30, 2016 while it jumped to BDT 3,801 billion on June 29, 2017, the last trading session of the outgoing fiscal year.
DSEX, the benchmark index of the Dhaka bourse, also surged 1,148 points or 25 percent to reach at 5,656 points on June 29, 2017.
The daily average turnover in the outgoing fiscal year also jumped to BDT 7.55 billion, which was 74 percent higher than the previous fiscal year’s average of BDT 4.34 billion.
Analysts said the escalation of market cap, index and turnover value — the three most important indicators of the stock exchange — in general suggests that the investors’ confidence in the capital market is coming back.
They said the market has been on the rise in recent times mainly due to investors share purchasing frenzy as they were in an expectation that the prices of shares will rise further.
As the market has been on the rise for more than three months, investors, who were on the sideline, continued to inject funds, they said.
“The upward trend of the index was supported by high turnover and upward movement of major large-cap sectors such as bank, non-bank financial institutions, engineering and fuel & power,” said an analyst at a leading brokerage firm.
Since the banking sector has the highest market cap with free-floating proportion, the gain of this sector alone has made major contribution to the upswing of the index, he said.
The bank interest rate is declining, while foreign investors are injecting funds into the market.
“These are also the reasons behind the rising trend in the market” he added.
He noted that several factors like budget review expectation, June closing year-end earnings and dividend declarations coupled with optimism prompted investors to inject fresh funds on stocks.
Following the wide-spread criticism over proposed hike in the duty and new VAT law, the government finally back-track to implement the new VAT law in the next two fiscal years.
The government also incorporated a new slab of excise duty on bank-account balance for small savers following wide-spread criticism for Fiscal Year (FY) 2017-18.