A decent year for capital market

The capital market ended 2016 with hope and aspiration, as the index recorded an almost 9 percent gain in the course of the year.

A consistent rally, especially in the last two months of the year, enabled the key index of the premier bourse to stay above the 5,000 points level, yielding an 8.8 percent return for this year.

DSEX, the key index of the Dhaka Stock Exchange, closed the year with 5,036 points yesterday, the last trading of 2016, up from 4,624 points on the first trading day of the year.

Active participation of local and foreign investors and the psychological confidence were the main drivers of the market.

The market was consolidating round the year but the momentum picked up in the last three months and crossed the psychological barrier of 5,000 points.

“This current sentiment would only be sustainable if we overcome the hindrance from financial indiscipline and shortage of diversified products in our capital market,” said Kh Asadul Islam, managing director of Alliance Capital Asset Management.

Strong investor participation in the last quarter, consolidation of stocks prices, comparably high corporate earnings, low commodity and oil prices in the international market along with low interest rate were the pivotal reasons behind the decent year for the Bangladesh capital market, he added.

LankaBangla Securities in an analysis said the index movement was mostly driven by financial stocks.

“Since their year-end is in December and there is dividend expectation, these stocks moved up, which eventually contributed to the upward trend of the broad index,” the stockbroker said.

Apart from the index value, trading activities also jumped up 17 percent year-on-year.

Among individual stocks, Zeal Bangla Sugar Mills yielded the highest yearly return of 576 percent, while Bangas was the worst loser, plunging 46 percent in 2016. The daily turnover, another important gauge, stood at Tk 494 crore on average, up 16.78 percent year-on-year.

Market capitalisation stood at Tk 341,244 crore, an 8 percent jump from the previous year.

During the year, 11 new securities were listed on the DSE, which raised about Tk 1,112 crore.

With the inclusion of the new securities, the total number of listed securities on the DSE stood at 560.

The foreign investors have higher exposure now than ever before. The data and trading patterns reveal that most were in a buying mood rather than selling: they bought shares worth Tk 5,057 crore and sold shares worth Tk 3,716 crore to take their net investment to Tk 1,341 crore at the end of yesterday's trade. It can be reasonably expected that going forward in 2017, interest in the Bangladesh capital market will increase, as it presents an attractive case for foreign investors.

“Our low-correlation with developed markets, recent positive market trends, and low foreign ownership strengthen this case,” Islam said.