2021: A good year for the capital market

The country's both Dhaka and Chattogram bourses ended the year with their broad indices gaining one-fourth as the better than expected economic and corporate performances and low-interest rates attracted a wider base of investors to stocks.

DSEX, the broad-based index of the Dhaka Stock Exchange (DSE), closed the year at 6,756 points on 30 December, the last trading day of 2021, and the 25% annual gains came after the index's world-beating performance in the second half of the previous year.

Blue-chip index DS30 secured nearly 29% annual gains while Shariah-compliant securities' index DSES gained 15.22%.

As in 2021, the DSE saw its historic high market capitalisation and at the year-end, it was nearly 21% higher to increase the market value of all the listed companies to over 18% of the country's GDP.

DSE's average daily turnover increased to over Tk1,475 crore from that of Tk649 crore in the previous year, it was a good year for the capital market, said the DSE in its statement.

The primary market has been much more vibrant in 2021, as equity fund raising through initial public offerings (IPOs) increased significantly, fixed income securities issuance has had its much-needed takeoff, small companies have got their separate platform at the bourses, and reform in the ways how people avail primary shares.

In 2020, eight companies together collected Tk986 crore in equities through their IPOs. In 2021, the total equity raising jumped by more than 60% as 14 equity IPOs were successfully floated this year.

However, a lack of big-name companies on the newcomers' list was frustrating to many observers this year. 

The real breakthrough came in the debt instruments market as the regulators have been determined to establish a vibrant fixed income securities market that might reduce pressure on the country's banking system to finance long-term projects with their deposit funds mostly collected for a short or medium term.

Fixed income securities – various bonds and the first-ever Sukuk from the private sector, worth around Tk12,000 crore, have got the Bangladesh Securities and Exchange Commission's approval this year.

Bonds are attracting a diversified range of issuers, including the leading non-governmental organisations, as they find it convenient and a winning deal for financing their activities.

DSE Managing Director Tarique Amin Bhuiyan said the outgoing year was good also in terms of the progress in the market and product development tasks, results of which would be visible in the coming days.

The capital market's historic over-dependence on equity has begun to reduce in 2021 that would offer investors a better opportunity to diversify their portfolios better.

However, the core task of making treasury bonds tradable on the bourses is still pending while it was planned to be done in the previous year.