Looking Back 2008
Capital market walks past volatile days
Sarwar A Chowdhury
2008 was a volatile year for Bangladesh’s capital market. Although the first half was fine for investors, the second half turned out to be gloomy, as their dream of a good return was dashed on many occasions by some factors. These factors include the psychological pressure from the possible global crisis fallout and so-called uncertainty over the national election.
However, the closing week of the immediate past year experienced a bullish mood, driven by the restoration of investors’ confidence on a transition to democracy after the December 29 general elections.
These investors once disliked the stock market regulaor’s intervention, which sparked off angry demonstrations several times. The protesters blamed the Securities and Exchange Commission’s move with regard to margin loan ratio for the slowdown.
The benchmark index of the Dhaka Stock Exchange, DSE General Index (DGEN), dropped 213.57 points, or 7.1 percent to 2,795.34 points on December 30, the last trading day of the year.
The DSE All Share Price Index also slid 220.31 points, or 8.71 percent to 2,309.35 points.
The DGEN’s single-day biggest rise was 100.88 points on November 23, backed by the positive political developments relating to all-party participation in the national polls. Its single-day biggest fall since 2005 was 100.38 points on November 27 in reaction to World Bank’s negative report on the country’s gross domestic product (GDP).
“The stock market passed an eventful year despite having an adverse atmosphere,” said Yawer Sayeed, the managing director of AIMS of Bangladesh, an asset management company.
The market, which looked uncertain at one stage, should now back in the black on peaceful holding of the parliamentary polls, he hoped.
Stressing the need for mobilizing a stock fund, Sayeed urged individuals and institutions to develop such a portfolio culture in order to strengthen the market.
During the period, the DGEN touched its peak at 3207.89 points on June 1 and the lowest at 2459.48 points on November 27.
The market, however, recorded some milestones in terms of turnover. A single day turnover on the premier bourse hit an all time high at Tk 590.51 crore on October 12 riding on a huge share transactions of Beximco Pharma and Square Pharma. The year’s lowest singly day turnover was Tk 74.39 crore on January 7.
The daily average turnover recorded a whopping 106.89 percent rise over the year 2007. Such turnover was Tk 281.84 crore last year, which was Tk 136.23 crore in 2007.
The market capitalisation also recorded some milestones with listing of several new companies. The market observed 15 new issues worth Tk 5.6 billion through initial public offering (IPO) against 14 issues worth Tk 4.63 billion. All the IPOs were oversubscribed.
By the end of the year, the total market capitalisation stood at Tk 1,043.80 billion, which was also the highest of the year and 19.26 percent of the country’s GDP.
Assessing the market in 2008, SEC Chairman Faruq Ahmad Siddiqi said it acted well. “Many of securities, which were overpriced in the previous year even until during the first half of the year, faced corrections in prices during the second half of the year that led the market to a downtrend,” he said.
The downtrend in some cases was also fueled by a psychological impact of the recent global financial meltdown, he added.
Siddiqi however hoped that the market would register further growth this year with listing of telecom and some multinational firms, and share offloading by several state-owned enterprises.
“Introduction of book building, a modern pricing method for IPO, will contribute to the expected growth, as it will encourage the big companies to be listed with the stock exchanges with a fair value,” he added.
Trading took place 237 days on the DSE and a total o 460.54 crore shares were transacted.
Of the securities listed on the DSE, 245 held annual general meetings (AGMs), 128 companies and mutual funds declared dividends, 82 issued bonus shares and seven declared rights shares. Fifty-eight companies did not declare dividends and 25 companies even did not hold AGMs.