Photo: Collected
The country's capital market has rebounded, reversing the continuous two-month downward trend. Share prices have started rising, allowing investors to recover some of their lost capital and market capitalization. Concurrently, the volume of transactions is increasing alongside the upswing in share prices.
According to market insiders, the capital market's resurgence can be attributed to four key reasons. Foremost among them is the reappointment of Professor Shibli Rubayat-Ul-Islam as the chairman of the Bangladesh Securities and Exchange Commission (BSEC), the capital market regulator, for another four-year term.
The Prime Minister has approved Shibli Rubayat as chairman considering him investor-friendly. Various rumours were spread in the market after this approval which caused the prices to fall. The positive impact on the capital market started from April 28 after the approval.
The second reason is that there was a rumour in the market that the National Board of Revenue (NBR) would impose a new tax on capital gains in the upcoming budget. However, the BSEC chairman said that no tax will be imposed on capital gains in the budget, dismissing the rumours.
Third, investor confidence has started to restore as the prices of undervalued shares increased. The fourth reason is that investors who were observing from the sidelines are making new investments as they can buy shares at lower prices. As a result, the transaction volume has also increased. BSEC expects this trend in the market to continue.
When asked, Mohammad Rezaul Karim, Executive Director and Spokesperson of BSEC told The Daily Messenger, “After the reappointment of the BSEC chairman, transactions have started in a positive direction. As a result, panic selling in the capital market is decreasing, and the pressure of forced selling is also decreasing.”
He added, “Foreign investors are also nearing the end of their share selling spree. Overall, after raising the floor price, the market fell more than expected. Now the market is returning to the path of recovery from there.”
As a result, the investors’ capital at the country's prime bourse, Dhaka Stock Exchange (DSE), returned Tk 6,229 crore during the week from April 28 to May 2. In the last week, the index rose on three working days out of four. It fell on one day. That's why investors' capital returned.
In the week of recovery, 228 companies and units saw their share prices rise. In contrast, prices fell for 133 companies, while 17 remained unchanged. As most companies' share prices increased, all three indices of DSE rose.
Among the three indices, DSEX, the prime index of DSE, increased by 97.17 points to stand at 5,615 points. Along with the prime index, the DS30 index, comprising selected good companies, also rose. This index went up by 33.35 points throughout the last week. The Shariah-based DSE Shariah Index, comprising Shariah-compliant companies, rose by 15.16 points last week.
At the end of the week when most traded companies' prices rose, DSE's market capitalisation stood at Tk 7 lakh 5 thousand 791 crore. In the previous week, the market capitalization was Tk 6 lakh 99 thousand 561 crore at the same time. In other words, DSE's market capitalization increased by Tk 6,230 crore in a week.
In the week when the market capitalization increased, the total transaction at DSE was Tk 2,823 crore, which was Tk 2,764 crore in the previous week, a decrease of Tk 59 crore. However, the daily average transaction increased from Tk 552 crore to Tk 705 crore, as the capital market remained closed on May 1 in observance of Labor Day.
Along with DSE, transactions worth Tk 183 crore took place at the country's other capital market, Chittagong Stock Exchange (CSE), last week. Among the 304 traded companies, 146 saw price increases, 133 experienced price declines, and 25 remained unchanged.
Messenger/Fameema
