Stock market in 2022: Some good comes with the bad
Major indices of the stock market in Bangladesh mostly saw decline throughout the outgoing year while turnover also took a plunge amid the gloomy economic scenario.
The biggest blow came when the floor price mechanism was reintroduced in late July as it ultimately made the market illiquid.
But despite the negatives, some positive steps were also taken in the year, such as the inclusion of sukuk bonds, making treasury bonds tradable, and approving the exit plan of two listed companies.
The stock market was bearish in the year due to the worldwide economic crisis stemming from the war between Russia and Ukraine, said M Shaifur Rahman Mazumdar, managing director of the Dhaka Stock Exchange (DSE).
The DSEX, the benchmark index of the DSE, shed a total of 549 points, or 8.14 per cent, throughout the year to close at 6,206 points on the last day of trading of 2022.
The DS30, the blue-chip index, plummeted by 337 points, or 13.32 per cent, to 2,195 points at the same time while the DSES, which represents shariah-compliant companies, fell 72 points, or 5.05 per cent, to 1,358 points.
The DSE's chief official hoped to see better days in 2023 as the crisis may be solved with the recovery of Bangladesh's economic indicators.
The DSE is going to launch an alternative trading board in the first month of the upcoming year to enhance the capacity of mobile trading and set an independent order management system for the bond market, which will influence the stock market positively, Mazumdar said.
Turnover, another important indicator of the market, eroded by around 35 per cent to Tk 960 crore, DSE data shows.
Stock market analysts blame the floor price for lowering the turnover as most stocks remained untraded even if the stock did not drop as buyers considered the prices to be artificially high.
At the end of last July, the Bangladesh Securities and Exchange Commission (BSEC) set the floor price of every stock to halt the freefall of market indices amid global economic uncertainties.
The floor price was the average of the closing prices on July 28 this year and the preceding four days.
A significant event in the year was the move to make treasury bonds tradable in the secondary market. With that, 250 treasury bonds worth Tk 316,808 crore of market capitalisation become a new product for investors.
The alternative trading board is going to effective from next month and so, the BSEC has already approved the first-ever exchange traded funds that would be traded on the board.
In the year 2021, the number of small-and-medium (SME) companies listed with the SME board was 6 and later increased to 15 in 2022.
The six companies that got listed with the DSE's main board this year raised funds of Tk 713 crore. Apart from these, a perpetual bond and mutual fund also raised funds of Tk 475 crore collectively.
In the previous year, 19 companies had raised funds of Tk 1,858 crore in total, the data shows.
At the end of 2022, the price-earnings ratio of the market stood at 14.08 with the lowest ratio belonging to the banking sector with 7.73.
Earlier this year, Bangladesh Bank finally agreed to allow market prices of stocks to be considered as a part of the banks' market exposure calculations instead of the cost price.
Stock market intermediaries had been urging Bangladesh Bank to give permission in this regard. And although stock market and banking analysts opposed the approval, the central bank granted it anyway after being instructed as such by the finance ministry.