DSE turnover increases 13.88% over the past week

Turnover on the Dhaka Stock Exchange (DSE), the country’s premier bourse, increased 13.88 percent last week compared to the previous week, although its major indices declined.

The average daily turnover rose to Tk 450.77 crore during the last week from Tk 395.20 crore in the previous week, according to the DSE’s weekly market review.

Market insiders, however, believe that daily turnover needs to reach at least Tk 1,500 crore to bring trading activities to an expected level and ensure the sustainability of the capital market.

A total of Tk 2,250.38 crore worth of shares was traded in five trading sessions last week, compared to Tk 1,185.62 crore in three trading sessions in the previous week.

President of the DSE Brokers Association of Bangladesh (DBA) Saiful Islam said that turnover in the capital market had declined steadily in recent times, falling to between Tk 400 crore and Tk 500 crore a day.

“Such a low level of trading is not expected considering the size of the country’s economy and the prevailing economic situation,” he said, adding that various government initiatives had helped improve turnover to some extent, but the market had yet to meet investors’ expectations.

He said there was no significant adverse situation that justified the current low level of trading in the capital market. The banking sector was trying to recover, while initiatives were underway to restore discipline in the stock market.

“Therefore, the capital market also has an opportunity to recover,” he added.

Meanwhile, the benchmark DSEX index declined 33.19 points, or 0.61 percent, to 5,417.44 points last week from 5,450.63 points in the previous week.

The DS30 index, comprising leading companies, fell 16.54 points, or 0.79 percent, to 2,086.86 points, while the DSES Shariah index dropped 19.73 points, or 1.84 percent, to 1,050.67 points.

In contrast, the DSE SME index, DSMEX, gained 6.4 points, or 0.63 percent, to reach 970.81 points.

The volume of shares traded also increased significantly. A total of 87.13 crore shares changed hands during the week, compared to 40.73 crore shares in the previous week.

Despite the increase in turnover and trading volume, declining share prices outnumbered advancing ones. Prices of 250 companies declined, while 109 advanced and 25 remained unchanged. Shares of 27 companies were not traded during the week.

In other market segments, Tk 179.53 crore was traded on the block market, Tk 12.88 crore on the SME board, Tk 52.90 lakh on the Alternative Trading Board (ATB) and Tk 30.09 crore in government securities.

Saiful Islam said daily turnover of Tk 1,500 crore to Tk 2,000 crore would be reasonable considering that the country’s economy was approaching half a trillion US dollars in size.

Without achieving this level of trading, he said, the market would not become sustainable for investors, listed companies or businesses interested in joining the stock market.

He stressed the need to expedite the initiative to bring bonds worth Tk 3,500 crore to the DSE’s main board to boost market turnover.

Bringing the bonds to the main trading board and ensuring their active trading would increase overall market turnover and encourage greater participation by retail investors, he said.

According to the DBA president, the comparatively higher interest rates offered by the bonds and the opportunity to trade them easily could attract ordinary investors.

“If an investor gets an opportunity to earn around 13 percent returns and can easily sell the bonds whenever necessary, it will certainly generate interest,” he said.

“We are holding discussions with the stock exchange to bring bonds worth Tk 3,500 crore to the main board. Some procedural issues involving software modifications remain. As the software used by the Dhaka Stock Exchange was supplied by a US-based company, the necessary changes are taking some time,” he added.

Saiful Islam expressed hope that the bonds could be brought to the main board for trading within this year.

He further said the capital market and the overall economy were currently in a recovery phase, requiring more active efforts from all stakeholders to accelerate the recovery process.