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The Financial Express

Depth of stock market remains elusive

Yearly review


 Mohammad Mufazzal | Published: January 01, 2018 10:35:05 | Updated: January 02, 2018 10:28:18


Depth of stock market remains elusive

The country's stock market passed 2017 registering some records, including seven-year high turnover value, amid fluctuation observed in broad index and turnover value during the year.

However, the market is yet to see the depth as required, market observers said.

Financial literacy programme also accentuated the year as Prime Minister Sheikh Hasina inaugurated the country-wide campaign in early January of the outgoing year for spreading investment-related education among the people from all walks of life.

The Financial Reporting Council (FRC) got its chairman in 2017 to activate its operation.

But the market failed to witness sufficient IPOs (initial public offering) in 2017 compared to previous seven years.

The exchange traded fund (ETF) was supposed to be launched by December, 2014 to diversity the capital market. The securities regulator had also published the gazette notification on ETF rules on June 13 last. But the exchanges failed to launch the product as the short selling rules is yet to be finalised.

The regulator had approved some new provisions to amend the mutual fund rules on December 7, 2015 to bring discipline in mutual fund industry.

But the BSEC is yet to take public opinion to finalise the amendment to the rules of MFs.

The Dhaka Stock Exchange (DSE) registered the highest turnover in 2017 since the stock market debacle in 2010-11, riding on increased trade participation by the investors. The DSE featured a daily average turnover of more than Tk 8.75 billion, whether the turnover during 2011-16 was between Tk 4.23 billion and Tk 6.64 billion.

The benchmark index of the Dhaka Stock Exchange DSEX posted 24 per cent growth to more than 6,200 points in 2017. On November 26, the DSEX closed at 6336 points, the highest ever mark since the introduction of new benchmark index. The DSE also registered the highest ever market capitalisation worth above Tk 4.26 trillion on November 23 last.

But the fund raised by companies through IPOs declined significantly in 2017 compared to previous seven years. The IPO funds raised from the capital market ranged between Tk 8.30 billion to Tk 16.77 billion annually during the period between 2009 and 2016. But in 2017 only seven IPOs of six companies and one closed-end mutual fund (MF) were floated and a capital worth Tk 2.19 billion was raised from the stock market in 2017.

Four years after the suspension of the method in 2010, the securities' regulator introduced new rules of book-building method in December 2015 by increasing the number of disclosures and due diligence requirements for issuing companies and issue managers.

In June 2017, the securities' regulator brought another change in book-building method in case of conducting bidding process.

After enactment of new rules, the ACME Laboratories and aamra networks went public under book-building method.

The officials of the securities regulator, however, said the approval process of some IPOs is being completed.

mufazzal.fe@gmail.com

 

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