DSEX, the benchmark index of the Dhaka Stock Exchange, gained 21.3 per cent, the highest among its peers, despite the 66-day recess for the countrywide general shutdown to slow the spread of coronavirus
Bangladesh’s capital market yielded the highest returns in 2020 among Asia's emerging economies, in what can be viewed as yet another endorsement of the solid shift put in by the current team at the Bangladesh Securities and Exchange Commission since taking charge in May.
DSEX, the benchmark index of the Dhaka Stock Exchange, gained 21.3 per cent, the highest among its peers, despite the 66-day recess for the countrywide general shutdown to slow the spread of coronavirus, according to LankaBangla Securities.
This was quite the turnaround for DSEX, which fell 17.3 per cent in 2019 while bourses in emerging Asian countries registered growth.
DSEX closed 2020 at 5,402 points despite being on a free fall between January and March as investors all over the world panic sold as the novel coronavirus from Wuhan, China was putting down its roots everywhere.
At one point, the index was the lowest since January 2013.
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.
Between June 9 and June 25, turnover at the DSE remained below Tk 100 crore for 13 consecutive sessions, tumbling to a fresh 13-year low of Tk 38.6 crore on June 21.
The investors then had a change of heart, which the stock market stakeholders attributed on the realisation that the stock market's new regulatory body means business.
In August, Bangladesh’s stock market rose the highest among Asian bourses and also performed the best in the world with a 15.8 per cent gain in key index, according to Bloomberg.
Stock investors were getting their confidence back due to some punitive and reformative actions taken by the BSEC to bring about discipline in the market, said Abu Ahmed, an honorary professor at Dhaka University’s Department of Economics.
“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.
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 added.
The recent steps taken by the commission, aimed at protecting retail investors’ rights and regaining their confidence, have begun to yield positive outcomes, BSEC Chairman Shibli Rubayat-Ul-Islam told Dhaka Tribune.
“We will not back down from the goal of establishing good governance in the capital market,” he said.
Meanwhile, in 2020 the Dhaka bourse saw the fourth lowest price-to-earnings (P/E) ratio, which measures a company’s current share price relative to its per-share earnings.
The ratio of shares on DSE stood at 19.18 at the end of last year.
The engineering sector, which comprises 41 companies, generated the highest returns in outgoing year: 133.1 per cent.
It was followed by general insurance (97.5 per cent), miscellaneous (49.8 per cent), telecom (49.6 per cent) 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.