The Dhaka Stock Exchange (DSE) continued with its bullish rise since the 2018 Parliamentary elections, as investors, both individual and institutional, continue to make strong and significant movements in the market, with turnover of the country’s premier bourse, DSE, hitting its highest mark in the last 14 months. The turnover on the 15th of January, 2019, hit 1146.32 crore, which is a rise of more than 17 percent compared to the previous day, and the highest since 20th of November, 2017.
The turnover in the stock market is one of the more important indicators of a market, which is normally associated with liquidity in the market, and a high turnover usually attributes itself to increased liquidity in the market. In addition, since the elections, the stock market has continued to rise with the DSEX, the key index of the DSE, now standing at 5836.23, which is an increase of more than 450 points since the last trading day of 2018 and is continuing to rise, which is also the highest increase on a post-polls market.
Although it was expected that the DSE would do far better following the polls, as it had closed 2018 on a significant decline throughout the year, the increase has been far more than what industry experts had previously expected. Industry insiders added that the increase was more psychological as it didn’t have much to do with the fundamentals of the market as a whole, and this is can be seen as a cause for concern.
2018 had not been a good time for the stock markets in Bangladesh, with the DSE down by more than 850 points (858.88 points) or 13.75 percent, compared to the end of trading in 2017. However, although the market was down overall throughout the year, there were no large-scale crashes or crisis experienced in the capital market in the year. One of the main reasons behind this was also attributed to the decrease in foreign investment in the DSE, as foreign investors decreased their investments in the markets mainly due to the political uncertainties in the election year, depreciation of the taka against the US dollar and the different scandals in the country’s banking sector.
There seems to be a renewed sense of confidence and optimism in the market, as investment and turnover have both rapidly increased since the elections and stocks on the DSE seem to be going through a positive price correction in addition to the overall increase in trading volume. The turnover in the market has been increasingly positive since the elections, with the average daily turnover at more than Tk 900 crores since the end of 2018.
However, with this increased investment and subsequent high increase in the DSE indexes since the election, there is a sense of caution amongst certain investors in the market, as there have been crashes in the market following bullish increases in recent history, most notably in 1996 and 2010. Industry experts also point out that the current increase may also attribute to increasingly difficult outlooks for individual investors, especially with the continued increases in junk stocks, which have been increasing mainly due to rumours or speculation in the market.
On the other hand, as foreign investors continue to improve their outlook for the Bangladeshi markets since the elections, in line with the improved political scenario, and local investors, both individual and institutional, continue to make strong significant movements in the market, the future of the DSE does look to be increasingly positive at least in the short run.