2017 in review: A phenomenal year for the stock market

The outgoing year has been phenomenal for the country’s stock investors, as price index of Dhaka Stock Exchange (DSE) saw a sharp rise by 23.98% to 6244 points. As of Thursday, DSEX, the key index of the DSE, ended at 6,244 points on the last trading day of 2017, up by 23.98% from 5,036 points on December 29 last year. In the outgoing year, the DSE’s average turnover value stood at Tk874.83 crore, the highest since the stock market witnessed a crash in 2010. In 2016, the average daily turnover was Tk494.43crore. Meanwhile, the market capitalization increased by 23.93% to Tk422,894 crore, which was Tk341,244 crore in the previous year. Speaking to the Dhaka Tribune, Rafiqul Islam, a stock investor, said: “I have pocketed a big amount of money in the outgoing year, much of which came from bank stocks. “Compared to last year, 2017 saw more returns as the stock market has been stable thanks to the participation of investors from other countries.” DSE Broker’s Association President Ahmed Rashid Lali said: “We have seen a stable and balanced stock market this year. In the upcoming year, the market is likely to be more vibrant as a clearance settlement company and a short-selling system will be introduced, and some derivatives will be added. “In terms of compliance issues, both brokers and investors were in a better position. As a result, there was less foul play in the market.” He urged the regulator to expedite the Initial Public Offering (IPO) process so that the supply of shares can be increased. In the outgoing year, the DSE’s average turnover value stood at Tk874.83 crore, the highest since the stock market witnessed a crash in 2010 | Mehedi Hasan/Dhaka TribuneAnis A Khan, vice president of the Bangladesh Association of Publicly Listed Companies, said: “There were good turnovers and rise in price index in the stock market this year due to the active participation of investors.” Investors pumped huge amounts of funds in the market as they were inspired by the industrial growth and better economic indicators, he added. Anis also said: “The IPO [a key element to increase market strength and depth] was not good as expected. I think that in the forthcoming year, stakeholders should focus on awareness building and encourage businessmen to raise more funds from the capital market.” Saifur Rahman, executive director of Bangladesh Securities and Exchange Commission (BSEC), said a literacy programme launched for investors greatly helped them make wise decisions while investing in the stock market. “We are expanding the programme to make more investors aware about investment methods.”

Challenges and barriers

The banking sector that played an important role in bringing back stability in the stock market, is currently going through a crucial time owing to bad loans and numerous anomalies. So, ensuring a sustainable stock market is now a big challenge to the regulator. AB Mirza Azizul Islam, former advisor to a caretaker government, said:  “Investors do not have confidence in the banking sector due to financial irregularities and disbursement of bad loans.” To restore their confidence and bring back stability in the banking sector, he suggested the regulator focus on corporate governance and take measures to ensure discipline in this sector. As banks’ boards of directors are responsible for most of the anomalies in the sector, they must be barred from interfering in day-to-day activities of the management, the noted economist said.

Focus should be on quality stocks

As the lack of quality stocks is likely to drive investors to junk their shares and create a bubble again, attention should be given to ensuring the supply of larger-volume and quality stocks in the coming year, insiders said. This year, fund raising from the stock market through IPO saw a sharp fall by 74.18% to Tk219.25 crore, the lowest since 2009. In the last year, it was Tk849.30 crore. Abu Ahmed, a leading economist and capital market analyst, said: “In terms of price index, stock market performance was good this year. The increased amount of foreign investments was a vital driving force in this regard. But, what the market failed to get is the supply of quality stocks.” The market would be even better and more stable in the next year as the price index is in a good state, he said, adding that the authorities should focus on corporate governance and supply of quality stocks. “Since the investors got their confidence back in the market, I think there should be strong monitoring measures so that no one can manipulate the market,” said Mirza Azizul.