Bangladesh stock market has two stock exchanges: Dhaka Stock Exchange(DSE) and Chittagong Stock Exchange(CSE). Bangladesh is one of the fastest growing developing countries in the world. She has cheap human resources.
As a result, many foreign countries have been investing in Bangladesh. Moreover, the number of businesses has been increasing since after the liberation war. Approximately, Bangladesh has over 5000 companies. From above, Dhaka Stock Exchange– the main stock exchange of Bangladesh- has already listed 403 companies.
On the other hand, Chittagong Stock Exchange– the second stock exchange of Bangladesh- has currently 371 listed companies. This is a large post. You can jump to any topic.
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Bangladesh Stock Market Overview
Like many other stock exchanges, Bangladesh stock market has long history. Dhaka stock exchange (DSE) started its journey in 13 May, 1954. On the contrary, Chittagong stock exchange (CSE) started its journey in 12 February, 1995. Present market capital of DSE is 65.65 Billion USD.
Market capital to GDP ratio is 18.75%. DSE has three Indices: DSE X index, DSE S index and DS30 index. You can read Dhaka Stock Exchange broad index analysis to learn the historical information to take trading decision. Chittagong Stock Exchange Indices: CSE30, CSCX, CASPI, CSI, CSE50.
Bangladesh Stock Market History
According to Wikipedia, Dhaka stock exchange first incorporated as East Pakistan Stock Exchange Association Ltd on April, 1954. Later, it begun formal trading in 1956. After the liberation war in 1971, the previous name was changed and it was renamed as Dhaka Stock Exchange.
DSE started automated trading on 1 January, 2001. On 16 November, 2009, Dhaka Stock Exchange benchmark index crossed 4000 points for the first time. Later, in 2010, the index crossed 8500 points. Finally, crashed in the first quarter of 2011.
On the other hand, Chittagong Stock Exchange incorporated as a company on 1 April, 1995. On 4 November, 1995, CSE formally opened. It started Internet based trading system on 30 May, 2004. Later, on 8 July, 2015, CSE launched new brand logo.
Bangladesh stock market crash
Bangladesh stock market has two big crashes since the incorporation of two stock exchanges. First crash was in 1996. Second crash in 2010. In 2009, Dhaka stock market faced turbulence throughout the year because of bullish trend started to turn grim.
This bullish trend was initiated for two-year political crisis during Awami League won the December 2008 polls. On 16 November, 2009, Grameenphone entered capital market. For this company, index rose by 22% over a single day.
Share prices continued to fluctuate and reached high in the middle of 2009. Later, prices started to downtrend by the end of 2009. Retail investors started hunger strike. Many of them committed suicide. Similarly, Bangladesh also faced another such a stock crash in 1996.
Hidden Reasons behind Crashes
During both of the crashes, Awami League were in power. The turbulence was continued throughout 2010. Share prices reached higher high. Largest price fall happened in a single day since after the 1996 market crash. On 19 December, the capital market suffered a second fall.
551 Points went down on a single day. This was the largest fall in the 55-year history of the Exchange. Index crossed 8500 points in 2010, and finally crashed in the first quarter of 2011. Millions of investors lost their money. They came out onto the street blaming the speculators and regulators for the crash.
This crash became known as the 2011 Bangladesh share market scam. At present, DSE has total 22 industrial sectors which accommodate over 400 listed companies.
The main reasons for market crashes are overvalued market, low flow of money, political instability and institutional investors interaction. Small investors were the ultimate losers. (Information Source: Wikipedia. Follow Wikipedia to Learn more)
How to invest in Bangladesh stock market
I have posted a complete article on how to start investing in share market as beginners? If you are new in stock investing, you should read this article. Here, I have referred the key points of this article. 9 Stepped to start investing in Bangladesh stock market.
1st Step: Make up mind to invest in stock market
2nd Step: Open a bank account for BO Account opening purpose
3rd Step: Selecting a broker house to act as agent
4th Step: Open a Beneficiary Ownership (BO) Account to deposit money for investment
5th Step: Study the stock market to pick up the right stock
6th Step: Make a deposit in BO Account
7th Step: Select stocks to buy for investing
8th Step: Holding stocks for some time to get profit
9th Step: Selling or Buying decision based on market behavior
Bangladesh stock market index
Bangladesh has two stock exchanges. Dhaka stock exchange has the following indices:
This index is the representative of whole market movement. Traders and investors follow this broad market index to take buying or selling decision.
DS30 Index consists of top 30 listed companies. These companies are market draggers or market pullers. These companies have to fulfil certain criteria to hold top 30 status. If any company lags behind by any criterion, it will lose top 30 status. You can learn the movement of top 30 fundamental companies by following this index.
DSES index consists of shariah based companies. So, you can learn the performance of shariah based (listed by maintaining Islamic law) companies from this index.
Similarly, Chittagong Stock Exchange Indices: CSE30, CSCX, CASPI, CSI, CSE50. In order to learn more about CSE indices, follow the link.
Technical analysis of Bangladesh stock market
The Financial Ask is an investing website. You can learn stock market basic knowledge to complete investing solution. In order to gain technical analysis complete knowledge, please read top 9 technical analysis tools. In order to cut-short the post, I am going to refer key points for your bird’s-eyes view. These technical analysis tools are:
Candlestick Chart, Minutes Chart, RSI (Relative Strength Index), MFI (Money Flow Index), SMA (Simple Moving Average), EMA (Exponential Moving Average), WMA (Weighted Moving Average), MACD (Moving Average Convergence Divergence), Beta Coefficient
Stock market chart
Candlestick chart is the number one chart to know the instant price movement of stock. Many traders use this chart to know the price movement. You have to learn how to read candlestick chart for trading. In order to develop chart reading skill, you have to know the application of candlestick chart.
Bangladesh stock market newspapers
Personally, I read three daily newspapers for learning stock news. If you feel comfort about English reading, you can read The Business Standard’ stocks news section, The Financial Express’ Stock news section and The Daily Star’s stock news section. For Bangla reading, you can follow the link allsharebazarnews.com-newspapers.
Bangladesh stock market analysis platforms
You can directly trade by DSE App. If you want to analysis stocks by app, you can free download StockNow app. If you want to analysis stock by any website, I suggest you to follow Langkabangla Financial Portal. You don’t need any more material. These are free platforms. These free resources can be used for stock analysis.
How to earn money from Bangladesh Stock Market?
In this section, I try to write from my experience. This was middle of the July when I started stock investing in Bangladesh stock market. At this time, market was uptrend. My holding was continuously increasing. Without sufficient experience, I was earning money from Dhaka Stock Exchange.
I thought what an easy task to earn money from stock trading! That situation was changing from September. I begun to lose money. I wanted to find out the reasons behind downtrend market. After months study, I figured out the main reasons.
Only two reasons negatively affected the whole market. First reason: market was continuously overvalued because of buying pressure. RSI value was high. Profit taking attitude held September, October and November.
Why did excessive sell pressure?
That was the second reason. June closing companies started to declare dividend. Investors were not satisfied about dividend rate. On the contrary, continuous index movement aided to overvalued market. Traders and investors started to take capital gain.
As a result, excessive sell pressure held. Market went down. You must read the article about top 5 price sensitive dates that negatively affect the market so that you can learn in advance to protect your capital.
How to protect your capital ?
You must be aware about these dates’ effect: AGM/EGM Date, Dividend Declaration Date, Spot Date, Record Date and Quarterly Performance Announcement Date. As I have already posted an article on these dates’, I am going to avoid writing again in this article. Please read the article top 5 price sensitive dates that affect stock trading.
How to profit from Bangladesh Stock Market?
Bangladesh Stock Market is highly sensitive. I discussed many investors about their portfolios. None of them give me positive answered. They said that, their investment account is negative. Share investing is an addiction. So, they didn’t stop investing.
They believe that they will earn more money in future! As Bangladesh share market is not stable, it is difficult to earn money. You can make money from market if you can understand the traders’ movement. Moreover, trade trend reversal is a good way to earn money.
In order to succeed in share business, you must need skill and experience. There is no chance to become overnight rich. If you read successful traders and investors investing story, you will learn that they lost whole capital within first year of stock business.
11 Steps to earn money from stock investing
1. List at least 30 to 50 companies;
2. Studied them properly;
3. Observe their behavior for a year;
4. In the next year, buy 1 to 3 company’s shares at the right time.
5. Try to buy at 52 weeks lowest price;
6. Wait for some time to flourish you holding.
7. From your one-year observation, you may know when this stock reaches high.
8. Sell before dividend declaration or near 52 weeks highest price.
9. Don’t hurry to buy or sell. Try to buy at discounted price.
10. In your first year of investing journey, invest small amount in different companies so that you can learn the behavior of that companies.
11. Buy shares from watch list when a company’s price touches the lowest point.
You can’t learn everything from a single post. I recommend you to read Financial Ask’s Stock section so that you can achieve complete knowledge about stock investing.