Capital Market in Bangladesh

Background of the Market

DSE, the first stock exchange of the land was incorporated on April 28, 1954 , while the second stock exchange – CSE was established in 1995

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After independence of Bangladesh, trading activities started in August 1976.

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From 1998 automated screen based trading was introduced by both the exchanges through LAN and WAN connectivity and HP non stop trading platform is providing basic architecture.

Capital Market in Bangladesh

Corporate Structures of the Exchanges

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The Stock Exchanges are registered as Public Limited Companies under companies Act.

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Presently DSE has 234 outstanding shares (members) while CSE has 140 shares outstanding.

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The exchanges are Self Regulatory Organizations and their activities are regulated by

Articles of Association Own set of Rules, Regulations and Bye-laws Securities and Exchange Ordinance 1969 Securities and Exchange Rules 1987 Other relevant laws.

Capital Market in Bangladesh Basic Markets

   

Public Market :

For general trading

Spot Market :

For pre-book closer trading

Block Market :

For bulk volume trading

Odd lot Market :

For odd lot trading

Trading Session

Trading at DSE is performed through a non-stop platform in following sessions : Continuous Trading hours : 10.00 AM to 2.00 PM Trading day : Sunday To Thursday.

Capital Market in Bangladesh

SETTLEMENT & CLEARANCE SYSTEM Primarily Settlement Period is T+1 and T+3 Days :

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All the trades are cleared and settled, as per Settlement of Stock Exchange

Transactions Regulations 1998

.

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From January 24, 2004 CDS system started functioning & transactions of all demated Securities are settled and registered through CDS

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A central clearing company is under process to ensure efficient financial settlement

Capital Market in Bangladesh Market Standard and Requirements



Disclosure Requirements by the Listed Companies

• Yearly Audited Financial Statement within four months of the year end.

• Half-yearly Un-audited financial statements within one month of the first half-year end.

• Price Sensitive disclosures 

It is mandatory to follow in preparation of the accounts

• International Accounting Standard (IAS) • International Standards for Auditing (ISA) 

Corporate Governance

• All the listed companies are required to adopt the Corporate Governance Guidelines issued by SEC and required by Listing Regulation

Capital Market in Bangladesh

Featured by: Low Ratio of Market Capitalization to GDP Country Bangladesh ( DGEN) M.Cap

(US $ bn) 5.96

GDP (US $ bn) 63.73

M.Cap

to GDP ratio 9.35% M. Cap to Transaction 0.17% India (BSE) 730.00

854.48

85.43% 0.61% 0.82% Pakistan (Karachi SE) 46.69

128.99

36.20% Sri Lanka (CSE) 8.38

26.18

32.01% Source : IMF World Economic Outlook & Website of Stock Exchanges of Respective Countries. 0.22%

Capital Market in Bangladesh Basic Market Statistics Total Issued Capital of all listed Securities US $ 2.24 bn Market Capitalization of all listed Securities US $ 5.96 bn

LISTED SECURITIES As on April, 2007 => Companies : 258 ( A – 142 , B - 29, G-1, N-7, Z - 86) => Mutual Funds : 14 => Debentures : 08 => Govt.T. Bond : 42 All Securities are Distributed in 16 Sectors :

1. Banks 2. Investment 3. Engineering 4. Food & Allied Products 5. Fuel & Power 6. Jute 7. Textile 8. Pharmaceuticals & Chemicals 9. Paper & Printing 10. Services & Real Estate 11. Cement 12. IT 13. Tannary Industries 14. Ceramic Industry 15. Insurance 16.. Miscellaneous

Capital Market in Bangladesh

COMPANIES UNDER CDS Particulars Securities under the CDBL

Companies under the CDBL IPO (upcoming)

No.

153 111 3

Market Cap Tk. in mn

343,315 268,654 ---

% of total Market cap

83.21

80.39

---

Multinational & Joint Venture Companies Listed Particulars

Multinational Companies Joint Venture Companies

No.of company 12 6 Market Cap. in mn 80319.16

6101.46

% of total market cap.

19.86

2.25

1810 1610 1410 1210 1010 810 610 410 210 10

Capital Market in Bangladesh

5 YEARS MARKET PERFORMANCE (DSE only) DSE perform ance from May 2002 to April 2007

Trn in mn DGEN 900 700 500 300 2100 1900 1700 1500 1300 1100

Capital Market in Bangladesh

Sectoral Market Capitalization as of April 2007 Sector Financial Sector Market Capitalisation Tk in mn(334,207) % of total Market Cap

Banks Insurance Investment

Total Manufacturing

Foods Pharmaceutical s Textil e Engineering Ceramics Tannery Paper & Printing Jute Cement

Total Service & Miscellaneous

Fuel & Power Service & Real Estate IT Miscel l aneous

Total

Capital Market in Bangladesh

Sectoral Turnover during 2006 Volume(in mn) Value(Tk in mn) Financial Sector

Banks Investment Insurance

Total Manufacturing

Engineering Foods Jute T extile Pharmaceuticals Paper & Printing Cement T annery Ceramics

Total

Fuel & Power Service & Real Estate IT Miscellaneous

Total Miscellaneous & Service 180.49

15,235.98

Turnover %

47.83

1.25

3.88

52.97

3.73

1.18

0.02

4.61

7.48

0.02

5.48

1.04

0.05

23.61

17.17

0.36

3.10

2.78

23.42

Capital Market in Bangladesh

Weighted Average Sectoral P/E during April, 2007 Market PE 15.03

10.66

14.51

13.85

Capital Market in Bangladesh Sector

Bank Cement Engineering Food & allied Insurance Fuel & Power ' Insurance 'Investment IT Jute' Miscellaneous

Dividend of Listed Companies over the Years by Sector Dec 2003 Dec 2004 Dec 2005

Pharmaceuticals Service & Real Estate Tannery Textile Paper and Printing 23.69

Dividend 6.21

%a

25.94

19.38

24.21

54.44

18.16

30.26

8.92

2.61

20.57

19.58

6.00

16:66 5.08

0.31

Average Dividend % December 2004 18.84

6.25

% 2005 25.22

18.25

22.24

105.15

13.6

38.56

10.63

2.17

20.07

21.12

5.97

21.61

5.35

Dividend Average % December 2006 34.98

5.99

25.31

20.81

21.53

32.71

19.28

50.39

22.57

7.50

18.96

22.62

10:79 23.65

4.76

1.38

Dec 2006

35.05

6.56

20.31

12.44

18.32

27.92

18.33

40.24

9.33

2.89

23.49

25.49

12.19

7.54

6.38

2.16

Capital Market in Bangladesh

Market Development Over the Years

2500 2000 1500 1000 500 0 30.06.03

30.06.04

30.06.05

30.06.06

End of Year on June 30

01.05.07

A nnual Turno ver (Tk. In millio n) M . cap (Tk. in billio n) General Index

Capital Market in Bangladesh

Statistics of IPO Subscription Name of the Issue Sonar Bangla Insurance Islamic Finance & Investment Premier Leasing Int.Ltd.

Progressive Life Insurance Bergers Paints Bangladesh Ltd.

Pragati Life Insurance Jamuna Bank Ltd.

S. Alam Cold Rolled Steel Ltd Lankabangla Finance BIFC IPDC BRAC Bank Ltd.

Prime Islami Life Ins. Com.

Shahjalal Islami Bank ICB AMCL 1st NRB MF Total Public Offer Taka in mn 90.00

100.00

100.50

45.00

11.60

45.00

386.1

108 90.00

110.95

139.00

500.00

45.00

935.85

100 2,807.00

US$41mn Public Subs. Over Subscription Taka in mn in times 360.56

1,597.14

4.01

15.97

1,059.90

1,643.58

1,227.96

10.55

36.52

105.90

1,734.95

3896.51

442.07

1483.24

1569.64

2261.88

4171.54

1417.04

4025.65

944.56

27,836.20

US$403mn 38.55

10.09

4.09

16.48

14.15

15.27

7.34

30.49

4.3

9.45

9.96

Capital Market in Bangladesh DIRECT LISTING Provisions

Issuer Dhaka electric Supply Co. Ltd. (DESCO) Power Grid Co. of BD. Ltd.(POWERGRID) Paid up Capital Tk.in mn Total Offloading Tk.in mn 1,271 317 For General Public/Ins Tk.in mn 286 3,643 910 865

Capital Market in Bangladesh

Future Prospects

The capital market in Bangladesh yet far from its real potentials.

From present stage, the major future events that will change the market are highlighted as:  Within 3 to 6 months 8 large profitable government enterprises are going to be listed under Direct Listing Method adding value worth another 1 billion Dollar.

 The Telecom Giants in Bangladesh are finalizing their offers for IPO in the market.

 Power and energy sectors demand for capital is 5 to 10 billion dollar within short time to meet the immediate needs of 5000 MW power demand. (Contd.)

Capital Market in Bangladesh Future Prospects (contd.)

 A deep sea port requiring 1 billion dollar is going to start with a policy decision that it will also be listed.

 The Pharmaceutical sector and API enjoying WTO benefit is growing sharply.

 Textile sector as backward linkage to thriving export oriented garments industries is booming.

 Export oriented food processing industry needs huge capital and technical capacity to meet the growing standards in global market for marine food, fruits and poultry.

 IT sector with our talented developers, yet to demonstrate the massive potentials of software industry of the country.

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Capital Market in Bangladesh

Future Programs for Further Development Active market of government, municipal and corporate bonds beside the corporate bonds to create alternative investment.

All securities to be brought under CDS within 2 years.

All major infrastructure companies, specially those in power, telecommunication and energy sector are to be listed ensure to broaden the market depth with at least US$ 15 billion market cap by 2009 having daily average turnover from current level of average of 10 to 15 million dollar to a level of 70 to 100 million dollar 2 years.

To strengthen merchant banks’ capacity to be more active. Ensuring speedy disposal of decisions for market operation.

Ensuring greater degree of transparency in financial disclosure and management structure for better corporate governance.