DSE market cap rises 89% during pandemic

Market capitalization at Dhaka Stock Exchange, the country’s premier bourse, rose to Tk 256,944 crore or 89.4 per cent in one and a half year despite Covid-19 pandemic.

Experts believe the rise was contributed by several factors, including the scope for whitening black money in the 2021-2022 fiscal year.

As of Thursday, the market capitalisation of the Dhaka bourse hit a fresh all-time high at Tk 544,326 crore from Tk 287,382 crore on March 18, 2020.

DSEX, the key index of the DSE, posted robust growth by 83 per cent to stand at 6,596 points on Thursday. It is the highest since its inception in January 2013, and the lowest was March 18, 2020, at 3,604 points.

Analysts and market insiders said that investors regained confidence after the Bangladesh Securities and Exchange Commission took some punitive and reformative actions to bring discipline in the market.

They also said that investors’ buying rush continued as they are expecting better returns from the bullish market against the low bank deposit rates.

Talking to The Business Post, Dhaka Stock Exchange Director Shakil Rizvi said, “A few years ago, our stock market was in a liquidity crisis, but now the scene is totally is different. The market has become bigger as a result of various initiatives taken by the present regulatory body.

Rizvi, also a former president of Dhaka Stock Exchange Brokers’ Association (DBA), also added that ensuring accuracy in financial statements, good governance in firm operations and automation are prerequisites in making the stock market vibrant.

The stock market is a good source of funds. But its true potential is still untapped. To attract entrepreneurs, the government has to set an example by offloading shares of state-owned companies, he added.

According to market insiders, investors’ positive expectations towards the capital market remained persistent, primarily backed by favourable macroeconomic outlook and continuous efforts by the BSEC, which translated into rising market participation and much-needed confidence.

The new commission’s most notable measures regarding several issues included market manipulation, mandatory shareholding by sponsor-directors and junk stocks. All these things gave confidence to general investors to park their funds at the bourse, they added.

Chittagong Stock Exchange (CSE) Chairman Asif Ibrahim told The Business Post, “BSEC has taken many steps to restructure and reform the market. More multinational and state-owned companies should be listed to strengthen the capital market. Tax policy for the listed companies should be made more attractive to attract foreign brokerage houses to trade in our market.”

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 the pandemic.

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. End the week, average turnover increased by 63.99 per cent to Tk 2,338 crore on DSE.