An Overview Of The Bangladesh Capital Markets By Sajid Amit

 

The word "Bangladesh capital markets" refers to the stock exchanges, bond markets, and other financial institutions that allow people to buy and sell financial products in the country. The Chittagong Stock Exchange (CSE) and the Dhaka Stock Exchange are Bangladesh's two main stock exchanges. (DSE). Let’s talk about Bangladesh capital markets by sajid amit.

Over the last 12 years, the Bangladesh economy has averaged GDP (gross domestic product) growth of around 6.0 percent per year, accompanied by significant shifts in sectoral outputs away from agriculture and toward industry and services, and an increasing contribution of the private sector to investment growth. One of the driving factors behind the private sector's contribution to investment has been Bangladesh's impressive expansion of its financial industry.

Key players and instruments in the Bangladesh

On Bangladesh's stock exchanges, there are numerous important participants and financial tools. In this essay, we will delve deeply into each of these.

Important people

Key players

1. Dhaka Stock Exchange (DSE):

The Dhaka Stock Exchange is Bangladesh's main stock exchange. (DSE). Since its inception in 1954, more than 700 companies have been established there. The DSE is an important player in the country's capital markets, providing a venue for companies to gather money by issuing shares and a place for investors to trade those shares.

2. Bangladesh Securities and Exchange Commission (BSEC):

The Bangladesh Securities and Exchange Commission is the governing authority in charge of policing the financial markets in Bangladesh. (BSEC). The BSEC is responsible for keeping financial markets open and investor-safe. It governs and supervises all actions regarding the issuance and disposal of assets.

3. Bangladesh Bank:

The Bangladesh Bank is the country's central bank. It has a major impact on the nation's financial markets because it controls the government bond market. It distributes treasury bonds and bills on behalf of the government, which are widely traded in the secondary market.

4. Investment Banks:

Investment banks play an important role in Bangladesh's capital markets. They provide a variety of services in addition to underwriting stocks, managing initial public offerings (IPOs), and helping customers with capital market transactions.

Financial instruments

1. Stocks

Stocks, or equities, are the most commonly traded financial goods on Bangladesh's capital exchanges. Companies issue stock to gather money from buyers. Investors buy and trade these shares on the stock exchange, and the price of the shares fluctuates according to market demand.

2. Bonds

Bonds are debt instruments issued by governments or businesses to gather money. Bondholders receive fixed interest installments over the life of the bond, as well as the principal amount when the bond matures. Bangladesh's bond market is small because the government issues the bulk of the country's bonds.

3. Mutual funds

Mutual funds are a popular type of financing in Bangladesh's financial markets. These funds pool the money of many individuals to invest in a wide range of stocks, bonds, and other assets. Mutual funds are available to investors as a lower-risk, more diversified way of investing in the equity market.

4. Derivatives

Derivatives are financial assets that derive their value from a base item, such as a stock, bond, or commodity. Derivatives are traded on the stock exchange and used for arbitrage, gambling, and hedging.

In a nutshell, the Bangladesh capital markets are comprised of a number of important people and financial instruments, each of which is critical to the smooth operation of the markets. Anyone wishing to participate in Bangladesh's capital markets must have a thorough grasp of these participants and instruments.

Sajid Amit’s view on capital market

Sajid Amit concentrated on the financial market in Bangladesh. According to Sajid Amit, bubbles are usually distinguished by a weak relationship between stock prices and a company's core assets. However, because Bangladesh's capital markets were still in their infancy in 1996, and investor knowledge was extremely low, investors resorted heavily to margin lending, which was aided by a rapid rise in both the money supply and credit.

The rise in bank money flowing into the markets is what caused the stock markets to become more liquid. Banks with sibling concern merchant banks and brokerage wings invested in the market either directly through their merchant bank and brokerage wings, through direct portfolio investment, or indirectly through a variety of bank debt products, including credit card loans. Bank clients routed funds into the market.

Rising BO accounts, according to Sajid Amit, were a forewarning of a market surge. The number of BO accounts registered with the CDBL has increased from 1.79 million at the end of December 2009 to 1.90 million in January 2010. Given that there were 2.5 million BO accounts as of June 2010, this implies that approximately 126 000 new private buyers joined the market each month during FY 2010.

Challenges in the Bangladesh capital markets

Despite the significant valuation, growth, and development that Bangladesh's financial markets have witnessed over time, there are still issues that must be addressed.

The capital market will confront the following challenges:

1. Lack of liquidity

Buyers find it difficult to acquire and trade securities in Bangladeshi capital markets due to a lack of liquidity. The low transaction activity in the stock and bond markets is a significant issue for buyers.

2. Limited investment opportunities

The majority of listed companies in Bangladeshi capital markets are small and medium-sized, limiting financing options. The absence of a diverse range of investment options impedes the growth of capital markets.

3. Lack of investor awareness:

Investors lack information and instruction about Bangladesh's financial markets. Prospective purchasers are not well informed about the benefits and risks of investing in the stock and bond markets.

4. Governance issues:

Insider trading, market manipulation, and financial thievery are just a few of the governance issues that plague Bangladesh's capital markets. These issues limit the markets' ability to grow and evolve, as well as erode investor trust in them.

Bangladesh's capital markets have gradually improved over the years and have come a long way since their inception in the early 1990s. Despite the challenges that remain, such as low liquidity and insufficient diversity, the regulatory climate is favorable, and the government is actively working to address these issues. We can expect further development and expansion in Bangladesh's financial markets as the country continues to modernize and expand.

This article is originally published on Ouedkniss.