Capital market turnover rises 17% following two policy decisions

The initiatives have generated fresh optimism among investors, with trading activity gaining momentum. The Dhaka Stock Exchange (DSE) recorded a 17.05 percent rise in its average daily turnover last week compared to the previous week.

Market insiders believe the government initiatives will help restore investors' confidence, increase market liquidity and encourage greater participation in the capital market.

The market, which has been struggling with persistent price declines and sluggish turnover, has yet to fully overcome its confidence crisis. Against this backdrop, the two decisions have created renewed optimism among investors. The announcement of the initiative to reactivate suspended BO accounts, in particular, triggered a significant market rally.

According to DSE data, average daily turnover stood at Tk 526.79 crore last week, up from Tk 450.08 crore in the previous week, registering a 17.05 percent increase.

Total turnover on the DSE during five trading sessions last week reached Tk 2,633.97 crore, compared to Tk 2,250.38 crore in the preceding week.

DSE Managing Director Nuzhat Anwar told BSS that expectations surrounding the reopening of suspended BO accounts had contributed to the recent positive sentiment among investors.

"Investors expected that reactivating the accounts, following the regulator's decision, would have a positive impact on the capital market and increase turnover," she said.

However, she said the DSE had not yet received a detailed official letter or information on the matter, making it difficult to assess the precise impact of the initiative at this stage.

Nuzhat Anwar also said daily turnover had recently increased from around Tk 500 crore to more than Tk 500 crore, describing the development as a positive signal for the market.

She said the rise in turnover following the regulatory decision could be viewed as an indirect positive outcome of the initiatives.

Dhaka Stock Exchange Brokers Association of Bangladesh (DBA) President Saiful Islam said the two decisions had generated fresh optimism among investors amid prolonged market declines and sluggish trading.

He said the initiatives had encouraged investment and increased market turnover.

"Reactivating all eligible suspended BO accounts would further increase trading activity in the capital market," he said.

He also said extending the deadline for using banks' special investment funds had helped ease selling pressure, contributing to the rise in market indices.

A total of 617 BO accounts had been suspended several years ago following requests from different government agencies and decisions by the regulatory authorities.

As part of efforts to reactivate the accounts, the DBA submitted a written application to the chairman of the Bangladesh Securities and Exchange Commission (BSEC) on July 20.

The association requested the commission to allow trading through the accounts, provided no legal or regulatory restrictions existed.

Following the application, the BSEC decided to reactivate the accounts.

Market insiders said a significant portion of the suspended accounts belonged to large investors. Their reactivation would allow the account holders to resume share trading, potentially increasing investment, turnover and liquidity in the market.

The return of long-inactive investors could also have a positive impact on the operations of brokerage houses and merchant banks.

However, the actual benefits will depend on how actively the account holders resume their investment activities, they said.

Extended bank fund facility opens scope for institutional investment

The second initiative is the extension of the deadline for banks to use their special investment funds until December 31, 2027.

The extension will give banks additional time to use these funds for investment in the capital market.

Market insiders said banks were among the major institutional investors in the country's stock market. Greater participation by banks could increase investment and trading activity.

In particular, active participation by institutional investors during market downturns can help absorb selling pressure and stabilise the market.

However, the effectiveness of the initiative will depend on how much of the available funds banks actually deploy and the types of shares in which they invest. Merely extending the deadline will not be sufficient without ensuring effective utilisation of the funds, they said.

Chief Executive Officer of Anwar Securities Md Azam Khan told BSS that a prolonged confidence crisis, sluggish turnover and limited institutional investment had remained major obstacles to the development of the capital market.

He said the decisions to reopen suspended BO accounts and extend the deadline for banks' special investment funds created positive expectations in the market.

However, he stressed that further effective measures would be necessary to ensure sustainable development of the capital market.

Azam Khan said authorities should encourage the listing of fundamentally strong companies, ensure transparency and accountability, prevent market manipulation and strengthen investor protection.

He also emphasised the need to increase institutional investment and continue long-term reform initiatives.

Market insiders said effective implementation of both initiatives, alongside greater investor participation, could further boost trading and investment activities.

They also stressed that ensuring transparency and good governance would remain essential for the sustainable development of the country's capital market, reports BSS.