Year End Review on Bangladesh Capital Market – 2023
MACRO-ECONOMY
The Bangladesh economy has been propelling at a double-digit nominal growth despite combating various domestic and global challenges. Thus, the real GDP growth exhibited a fresh surge since FY’14 and picked up steadily at 7.9% in FY’19 from 6% in FY’13. During the pandemic, the GDP growth sharply fell to 3% but it recovered and stood at 6.9% in FY’21. According to the provisional data of BBS, the current size of the GDP was $405 billion in FY’23 and the real GDP growth stood at 6.03%.
However, due to the global political turmoil, the growth of Bangladesh’s economy has slowed down to some extent. The global commodities inflation with supply-side constraints along with price surge of fuel resulted lowered economic activities, financial sector debacles and liquidity shortfall which put pressure on the country’s growth engine in the form of stretched BoP, taka devaluation and surge of inflation.
As per BBS, the export size in the FY’23 was $57.3 billion which rose by 8.3% due to the steady demand for ready-made garments. RMG exports increased by $42.80 billion in FY’23 as against $33.57 billion in FY’22. The budget size was $69 billion in FY’23 which was 10% higher than the last fiscal year. The budget deficit widened to $24 billion; increased by 4% YoY. This scenario implies inefficiency in public finance management.
Major Macro-Economic Indicators
- The average general inflation in FY’23 was 9.02%
- Gross foreign exchange reserves up to Dec’23 is $26.8 billion
- Weighted average call money rate in Dec’23 is 9.16
- Government’s domestic(P) & external(P) borrowing was 59% & 41% respectively in FY’23
- Remittances up to Nov’23 is $1.93 billion
- Cut-off yield for T-bonds as of Dec’23 is 11.20%
Stock Market
The key index (DSEX) of the Dhaka Stock Exchange did not change significantly at the end of the passing year 2023 as most scrips were stuck at the floor price. The DSEX index gained 0.6% compared to the previous year 2022 from 6206 points to 6246 points YoY. DSEX got the lowest return in comparison with other South Asian emerging markets such as BSE Sensex, and Karachi100.
The index hovered up and down to range from 6177 to 6367 points throughout the year and most of the time was hanging around 6200 points. Total market capitalization stood $71 billion but the average value decreased by 40% at the end of the year. Although some opportunistic investors invested in some sector-specific issues in the hope of short-term return. Hence, the overall economic outlook was not favorable, lack of investor confidence was observed in the market. Last year in 2023, only 3 companies were listed in the main market whereas the 12 companies were listed in the previous year.
Bangladesh Securities and Exchange Commission (BSEC) took various initiatives such as: inaugurating the Alternative Trading Board (ATB), and launching the trading facility of treasury bonds in the secondary market for general investors. The capital market passed a dry and gloomy phase in the last year. But, there is a hope that, after the upcoming election if the new government can deal with the economic crisis efficiently and the regulator (BSEC) can move with timely steps then the capital market will revive in the year of 2024.
The year-end review of Bangladesh’s economy shows resilience despite challenges, including a double-digit nominal growth rate and a surge in real GDP. However, global political turmoil has slowed growth, with issues like commodities inflation, supply-side constraints, and fuel price surges. The DSEX index showed modest gains but struggled with investor confidence. The Bangladesh Securities and Exchange Commission (BSEC) implemented initiatives like the Alternative Trading Board (ATB) to inject vitality into the capital market. Despite these challenges, optimism lingers for a potential revival in 2024.
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