Investor confidence boosts stock market trade in 3rd quarter

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DSEX  gains a robust 19.2% during the July-September period

In the just-concluded third quarter (July-September), the country’s main stock market hosted a bull-run with the post-covid economic momentum.

Data analysis of the third quarter of 2021 shows that the benchmark index of the Dhaka Stock Exchange, DSEX, posted a robust gain of 19.2% during the July-September period. 

On the other hand, the daily turnover in the Dhaka stock exchange stood at Tk2,152 crore on average during the period, as investors were seen rushing to buy stocks. 

Three IPO companies, Baraka Potenga, Lovello and SBAC Bank, made their debut in the main trading board over the period.

Analysts in the stock market mentioned the post pandemic turnover after a long period of closed trading in the stock market. 

The continued market liquidity, low bank interest rates and a number of excellent decisions by the regulatory commission as the main reasons behind the upward trend in the July-September period.

CEO of VIPB Asset Management Company Limited and share market analyst, Shahidul Islam, told Dhaka Tribune: “After a long period there has been positive momentum in the country’s economy in recently, which has also benefited the stock market. Behind this, I think the country’s money market, banks and (BSEC Bangladesh Securities and Exchange Commission) played a vital role.”

“You will notice that during this time (3rd quarter) the overall transaction volume and the index have both increased more than before. Liquidity in the market has increased and investors’ confidence is also on the rise as no company has seen a sudden rise or fall in its share price.”

“Moreover, I think the bank’s low-interest-rate is another logical reason for increasing investment in the stock market,” he added.

Speaking to the Dhaka Tribune, Shakil Rizvi, director of the Dhaka Stock Exchange (DSE) said: “No one has been able to make any transactions for a long time during the Covid-19 lockdown. Again, during that time BSEC had worked and made several good decisions. As a result, investors’ confidence in the stock market has increased and this brings the gains the stock market had made in the 3rd quarter.”

Asked about the significant decisions by BSEC, Rizvi said: “Among many decisions, making it mandatory for 2% shareholding by each director individually, reinvestment of unclaimed cash dividends, giving strong notice to some companies with less than 10% share in the market to release the remaining shares quickly and monitoring any shares that have risen or drop sharply, are significant.”

“Launching the SME market at the very end of the quarter is also an excellent decision. The effect of which we may see in the next quarter,” he added.

The former DSE president said: “In order to prevent ‘bad’ companies from entering the market, BSEC would have to scrutinize the financial statements of the companies as well as to conduct a direct inspection of them through DSE and approve IPOs will increase the transparency and depth of the market as well.”

Note that, on September 28, DSEX, the benchmark index of the DSE, went up 45.52 points or 0.62% to settle at more than 7,297.24 – the highest since its inception nearly nine years back on January 27.