Majority stock investors are content as the year is ending with positive returns in three-fourths of the listed scrips, even without including the cash and stock dividends for the year.
On 30 December, DSEX – the broad based index at the Dhaka Stock Exchange (DSE) – closed the year with a 21.3% hike to recover most of the 17.3% and 13.8% losses in the previous two consecutive years.
Inclusion of large-cap stocks like Robi Axiata on top of the upward market trend helped the DSE market capitalisation increase by 32% to reach to the record level of Tk4.48 lakh crore at the year end, which came down to Tk2.87 lakh crore during the market bottom in last March.
Recovery from a panic attack
The stock market entered into a panic attack in March this year when the DSEX fell more than 22% in five weeks in the wake of the outbreak of Covid-19.
That was almost the end of the world for a large number of investors who already had lost huge due to prolonged market downturn.
Analysts used to blame the then unfavourable money market situation and poor confidence on the environment of the capital market.
However, investors saved their backs with the emergency lifeline in March that came in the form of floor prices, which later became irrelevant.
In the middle of the year, the capital market regulator got its new top officials who successfully restored confidence and enabled people to dream about a well-governed and developed capital market.
The central bank came up with unprecedented interest reduction measures and also the economy got increased money flow because of the implementation of stimulus packages.
The stock market got all the boosts it needed and in several months in the second half of 2020, Bangladesh climbed to the top in the global and regional stock market return tables.
In spite of too many speculative price hikes over the market recovery phase in the second half of the year, investors still demonstrated their preference for selective stocks and the blue chip index DS30 registered a 29.78% rise in 2020, while Shariah-based index DSES also outperformed the broad-based index.
The second half of the year secured better communication among policy offices that are important for the capital market.
Hints for better governance with some examples, regulatory efforts for opening new windows of investment and also for more investable securities are apparent to investors.
The Bangladesh Securities and Exchange Commission on 30 December instructed the two bourses to allow their brokers for opening their branches, which had been halted since the 2010 market crash.
Investors' increased participation boosted the DSE's annual turnover by more than 18% despite the fact that the market got only 208 working days in 2020, which were 246 in the previous year.
The stock market remained closed during the nationwide shutdown in the March-May period.
Foreign portfolio investors got more active here in the year, following their longest lasting selling pressure up to the first half of the year. Their participation in market trading increased to 7.7% this year which was 6.89% last year.
In a year, the average price to earnings ratio increased to 15.09% from 11.59%, according to the DSE.
However, market capitalisation as percentage of the GDP is still at 16.03, which indicates the underdevelopment and meager size of the Bangladesh capital market compared to the peer economies.