Dhaka Stock Exchange outdoes its peers in pandemic

Defying the adverse impacts of the ongoing Covid-19 pandemic, Dhaka Stock Exchange, the country’s prime bourse, fared well among its emerging Asian peers except India and Sri Lanka.

According to the Bloomberg research data, DSEX, the benchmark index of the Dhaka Stock Exchange, posted robust growth by 83 per cent to stand at 6,596 points as on August 5 of 2021. The gain is calculated based on the lowest market at 3,604 points as on March 18, 2020.

Meanwhile, the return at Pakistan key index, KSE 100, was 75 per cent followed by 68 per cent of Japan Nikkei 225, 55 per cent of Chinese SZSECOM, 43 per cent of UK FTSE100, 23 per cent of Malaysia FBMKLCI index and 21 per cent of Hong Kong HIS.

On the other hand, price-to-earnings (PE) ratio of the Dhaka Stock Exchange (DSE) lucrative for investment as it stands at 15.86 as of August 5. While the PE ratio of India stood at 30.38 followed by Thailand 27.02, USA 23.91 and Vietnam 16.88.

The PE ratio means a valuation ratio of a company’s current share price compared with its earnings per share.

Investors have got their confidence back due to some punitive and reformative actions taken by the Bangladesh Securities and Exchange Commission to bring discipline in the market, said stock market analyst Abu Ahmed, an honorary professor at Dhaka University’s Department of Economics.

DSEX closed on August 5, at 6,596 points for the first time since its inception in January, 2013, which was lowest at 3,604 points in March 18 of 2020.

In June this year, HSBC said that Bangladesh stocks hold opportunities for fund managers looking to diversify their portfolios and there could be “hidden gems” among the public-listed companies there.

What acts as catalyst to better performance?

Market insiders said that the investors’ buying rush continued as they are expecting better returns from the bullish market against the lowering bank deposit rates.

Stakeholders said that mass vaccination roll-out news and new stimulus packages for the low-income people also tempted the investors to keep afloat in the market despite virus worries.

Moreover, HSBC said the Bangladesh stock market deserves more attention as it holds opportunities for investors looking for diversification and hidden gems and projects 6.2 per cent growth for Bangladesh in FY22 amid mass vaccination, remittance inflow, and a rise in exports of readymade garments, they said.

In a research, International Leasing Securities said that the bargain hunters showed their buying appetite especially on bank and financial institution sector issues based on the good latest quarterly earnings disclosures due to higher operating income, lower provisioning and bullish capital market.

Apart from these two, the opportunist investors took positions in almost all the major sector stocks riding on the announcement of another expansionary monetary policy for the fiscal year 2021-22 by the central bank, it said.

Between June 9 and June 25 of 2020, 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 of 2020.

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.

DSEX closed in 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.

The key index 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.

This was quite the turns around for DSEX, which fell 17.3 per cent in 2019 while bourses in emerging Asian countries registered growth. At one point, the index was the lowest since January 2013.

Chairman of Chittagong Stock Exchange (CSE) Asif Ibrahim told The Business Posts that Bangladesh’s economy is growing. There is a huge opportunity to explore. Its capital market is also growing at the same time.

“We see a good future for the market as our capital market progresses. Lately, we have seen some growing confidence in the market with the new leadership of the Bangladesh Securities and Exchange Commission,” he said.