Bangladesh's stock market has passed yet another gloomy year as trading activities were dull almost throughout 2015.
Different efforts, which were taken by the government and regulators to shore up the market in the past five years since debacle in 2011, virtually failed to bring expected results in the capital market.
"The initiatives failed to motivate the potential investors to put in their money in stocks for a reasonable period of time while institutional investors mostly acted like small investors despite desperate efforts to revive the market sentiment," AB Mirza Azizul Islam, former adviser of the caretaker government told the FE.
On the first day of the year 2015, DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), was 4,864.96. The year's trading ended at with its main index, the DSEX, coming down to 4,629.64 on Thursday, the last trading day of the year, slumping 235 points or 5.0 per cent, according to statistics from the DSE.
The prime index of the DSE reached the highest level on January 6 at 4,970 points while hitting lowest on May 4 at 3,960 points. The highest turnover was recorded on June 1 at Tk 10.02 billion while the year's lowest turnover was Tk 1.66 billion on March 19.
The blue chip index-DS30 and Shariah compliant index-DSES also saw negative return of 2.91 per cent and 3.75 per cent respectively in 2015 over the previous year.
The daily turnover, another important indicator of the market, stood at Tk 4.23 billion on an average, down 16 per cent year-on-year in 2015, according DSE figures.
The market capitalisation of the DSE also dropped 3.0 per cent to Tk 3,159.75 billion on Thursday, the last trading day of the year.
The port city bourse Chittagong Stock Exchange (CSE) also suffered losses as its Selective Categories Index - CSCX - opened the year at 9,058.35 and closed the year 8,572.12 points, shedding 486.23 points or 5.37 per cent over the previous year.
Having passed yet another gloomy year, the country's stock investors welcome the New Year of 2016 with a bleak prospect of turnaround amid slow export growth, downward remittance inflow and sluggish private sector's credit growth.
"Overall economic sluggishness coupled with slow private investment and downward remittance, has injected pessimism among investors, darkening their broader investment outlook almost throughout the year," said Mr Azizul Islam, also former chairman of the Bangladesh Securities and Exchange Commission (BSEC).
The prospect in the New Year depends mostly on the country's overall macro-economic performance as well as the country's political situation, said Mr Islam.
Mr Islam is not expecting a buoyant 2016 for the stock market. "I see no major turnaround in 2016 for stock market unless the real economy performs well," he said.
The dearth of quality and big initial public offerings is another reason for the low investor confidence as investors even incurred losses from the IPOs.
During the year, 14 new issues, mostly small ones, were listed on the stock exchanges. With the inclusion of the new issues, the total number of listed securities on the DSE stood at 559.
Meanwhile, Regent Textile, which made its debut in mid-December, frustrated the investors most as its share price dropped below its offer price within two trading sessions. On Thursday, its share price closed Tk 19.8 against offer value of Tk 25.
Another new issue Simtex Industries price closed at Tk 22 on Thursday against its offer price of Tk 20.
"Throughout the whole year, investors remained highly concentrated in micro cap stocks, which yielded 16.2 per cent, the highest return this year. Large cap stocks could not meet investors' expectation and posted 9.50 per cent negative return, said IDLC Investments, a merchant bank, in an analysis.
Among the large-cap stocks, GrameenPhone, Lafarge Surma Cement and Titas Gas Transmission and Distribution Company lost 48 per cent, 43 per cent and 31 per cent respectively year-on-year in 2015.
Banks, which are considered as fundamental stocks, also saw no turnaround in 2015. Still seven banks are trading below their face value.
Faruq Ahmad Siddiqi, former BSEC chairman, said the market is suffering from a lack of confidence.
The country's capital market still grapples with a number of problems although a lot of reforms were made after the stock market debacle of 2010-2011, he said.
Most of the merchant banks, which are the major investors in stock market, could not yet absorb the shock of 2010 debacle as their position is now extremely weak and many of them are struggling for survival, said Mr Siddiqi.
Net foreign investment in the DSE also dropped sharply by 93 per cent in 2015 compared to what it was a year ago. In 2015, overseas investors bought shares worth Tk 38.26 billion while they sold shares worth Tk 36.40 billion, taking their net investment position to Tk 1.86 billion.
While the foreign investors bought shares worth Tk 46.10 billion in 2014 and sold shares worth Tk 19.90 billion, net investment was Tk 26.20 million, which was a record high.
Md Ashaduzaman Riadh, strategic portfolio manager of LankaBangla Securities, said 2015 was ominous for stock investors due to unprecedented levels of political impasse at the beginning of the year.
"Sentiment of both domestic and foreign investors was severely dented and it continued in the later half of the year," he said.
Corporate profit was badly affected and commodity price decline, lower inflation, downward interest rate, and stable currency could not cheer up the depressed sentiment of investors toward equities, he said.
He said the extreme dearth of quality liquid stocks is the main challenge for 2016. Still, the quality stocks that benefit from low commodity price and rising disposable income may offer good returns in 2016, he added.
Although a new trading system, which replaced the 16-year-old one, was introduced at the end of 2014 to ensure smooth trade, technical breakdowns halted the DSE for three days during the year.
The premier bourse launched 'DSE INFO' service to allow investors to get update information of the bourse more smoothly at lower internet expense.
However, search for strategic partners for demutualised stock exchanges to bring state-owned entities including big companies in stock market is still a major challenge.
In a major development, the special tribunal for capital market cases gave its first verdict in August. The tribunal sentenced a stock trader to two years in prison for illegally influencing the stock market through blogs and websites.
The tribunal, which was also dealing with the much-hyped 1996 share market scam, sentenced two directors of a textile company to four years in prison for their involvement in price manipulation.
© 2024 - All Rights with The Financial Express
