Bangladesh Capital Market

Capital Market Outlook

Bangladesh capital market is currently dominated by equity instrument with a potential to expand its fixed income instruments and add derivatives instruments as well. According to the market classification of Morgan Stanley Capital International (MSCI), Bangladesh capital market falls in the category of frontier markets - less advanced capital markets in the developing world. With a market capitalization of USD 52.9bn as of 31 December 2020, market cap to GDP stands at ~16.0% which is pretty low compared to its peer countries. Foreign investors own ~15.0% of free float market cap and foreign investors’ contribution in overall market trade ranges from 5-12%.

There are two stock exchanges in Bangladesh - Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE). However, a major portion of the trading takes place in DSE. DSE introduced DSE broad index (DSEX) and DSE 30 index (DS30) designed and developed by S&P Dow Jones indices methodology with effect from January 28, 2013. DSEX reflects around 97% of the total market capitalization. DS30 constructed with 30 leading companies which can be said as investible index of the exchange. Another index, DSE Shariah Index (DSES), designed and developed by S&P Dow Jones indices methodology was introduced in January 20, 2014. There are currently 329 equities, 37 mutual funds, and only two corporate bonds listed in the DSE.

The capital market has gone through different reforms over the periods and the future of the market looks bright given the consistent robust growth of the economy and favorable regulatory actions.