The Bangladesh stock market has provided investors with significant returns over the last five years. With a growing institutional investor base, increased liquidity, and foreign portfolio investment and foreign remittance inflows reaching a record high, this has lead to the growth of the main index, the DSE General Index (DGEN) which rose by 87.5% in 2007, making it one of the best performing markets in the world.

The Dhaka Stock Exchange (DSE) is the main bourse and in January 2008 had a market capitalisation of $11.3bn. It has 361 listed securities consisting largely of corporate equities, some mutual funds and debentures. It has an average daily turnover $19.5mn. The country’s second bourse, Chittagong Stock Exchange (CSE) has a market capitalization of $9.1bn with around 228 listed securities.

Since 2002, the stock market has experienced sustained growth with 5 year CAGR of 29% in the DGEN. Growth was underpinned by political stability, GDP growth, capital market reform and many companies coming to market.

Foreign portfolio investment in the stock exchange in 2007 was $129mn which represented an 830% increase from 2006, with further foreign investment flows expected with favourable investment, tax and repatriation rules.

In January 2008, the Bangladesh market traded at c.24x PE ratio, compared to a market PE of c.16x* in April 2007. Its market PE trails that of India (29x) while is higher than Pakistan (16x).

In the DSE there are 269 listed companies with the Banking sector accounting for 53% of market capitalization, followed by Fuel & Power (13%), Pharmaceuticals (9%), Cement (6%) and Insurance (4%)

With the development of the capital markets, there has been a steady flow of companies coming to market on the DSE with 7 entering the market in 2006 and a further 14 in 2007. The size, by value, of the market is expected to double within next two years as large telecom operators are expected to seek a listing in the next year and the government’s stated plans to privatize some large State Owned Enterprises this year in the power, energy, textiles, and service sectors.

  *as calculated using April 2007 market capitalisation data