Research, IDLC Investments Ltd.
2012
CAPITAL MARKET REVIEW
DGEN loses 19.75%
Average Daily Turnover Falls by 36.86%
Market Cap shrinks 8%
11.84 Bn Raised Through 14 IPOs
Mid Cap Stocks Outperform Others
Roadmap Announced for Capital Market
IDLC Investments Limited
Eunoos Trade Centre
52-53 Dilkusha Commercial Area
Tel: 9571167- 70, 9563913-15
Fax: 9571171
Salim Afzal Shawon
Research, IDLC Investments Ltd.
January 07, 2013
Capital Market Review 2012
Bangladesh Capital Market 2012 - Rough Journey Continues
Market Indicators:
After 36.6% decline in 2011, 2012 passed as another depressive
year for investors, with key index DGEN losing 19.75% over the
year. Following two consecutive losing years, DGEN is now
52.69% below from its peak value of 8918.51 in December 05,
2010. Over 2012, the index lost 1038.29 points, closing at
4219.31 points. In the way between, DGEN bottomed on Feb
06 2012 at a 27-month low of 3616.24. Since there, it reversed
and subsequently reached at 5502 points on Apr 17 2012,
which was the highest in 2012.
In addition to decline in index, plunge in turnover was also
apparent in 2012. 2012 Average daily turnover stood at BDT
4159 mn, 36.86% less than 2011 figure of BDT 6587 mn. On Jul
08 2012, Turnover hit a 39 month low at BDT 1157 mn.
Aided by a revived primary market, number of listed securities
increased from 501 to 515 in 2012. However, despite the
contribution from new listings, 2012 observed an 11% decline
in equity portion of market capitalization, and 8% drop in
aggregate market capitalization.
541
295
288
109
98
-50
-161
-365
-414
2010
2011
2012
244
235
238
-
4,010
1,561
1,001
-36%
16,514
6,587
4,159
-37%
70
72
91
26%
Market Capitalization (USD Bn)
Market Capitalization: Equity
portion (USD Bn)
43.99
32.81
30.14
-8%
38.05
25.42
22.67
-11%
DSE General Index (DGEN)
8,290
5,258
4,219
-20%
DSI Index
6,878
4,384
3,577
-18%
DSE 20
Total Number of Listed
Securities
5,205
3,910
3,473
-11%
445
501
515
3%
218
232
242
4%
Total Number of Mutual Funds
Total Number of Corporate
Bonds
31
37
41
11%
2
3
3
0%
Total Newly Listed Securities
Market Capitalization to GDP
(Ratio)
21
14
14
0%
50.67
33.23
26.27
-21%
Total Trading Days
Total Turnover value (BDT Bn)
Daily Average Turnover value
(BDT mn)
Average Volume (BDT mn)
Total Number of Companies
Change
Source: IDLC Research
Market Behaviour: Still Event-Driven and Volatile
DGEN: Monthly Change in 2012
700
500
300
100
-100
-300
-500
-700
-900
-1100
-1300
DSE at a Glance
-122
-283
-1104
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Source: IDLC Research
While almost two years have passed since 2010 crash, market
sentiment has not improved enough to expect a recovery.
Confidence is still shaky, and any negative sign still sparks panic
amid general investors. DSE thus continued to show event driven
volatile movements in 2012. Average movement in DGEN was
588.02 points monthly for 2012.
Meanwhile, true extent of volatility was observed in turnover
during the year 2012. As sentiment went back and forth, market
observed high movement in turnover, mostly negative.
2|Page
Capital Market Review 2012
Market Depth: Shaky Confidence Yields Low Participation
BDT mn
Turnover 2012
10,000
As confidence has not restored fully in the bourse, investor
participation saw a draught throughout the year 2012.
Apart from April and September, turnover mostly hovered
below BDT 4000 mn daily. As 2012 ended, turnover
registered a 36.86% fall in average daily turnover, dropping
from an average of BDT 6587 mn daily in 2011 to BDT 4159
mn daily in 2012.
In addition, average daily turnover have also fallen below
the level of 2009, on a historical basis. Over 2004-2012
horizon, daily turnover peaked in 2010, at BDT 16434 mn.
Compared to the peak, daily turnover have fallen by 74.41%
by 2012.
8,934
8,027
8,000
6,000
4,000
5,605
4,206
4,035
4,091
3,187
3,013
2,769
1,968 1,932
2,144
2,000
Jan Feb Mar Apr May Jun Jul
Month Avg
2012 Avg
BDT mn
20,000
Aug Sep Oct Nov Dec
2011 Avg
Avg Daily Turnover 2004-2012
16,434
15,000
10,000
5,000
6,642
6,046
264
251
303
1,362
2004
2005
2006
2007
4,206
2,818
2008
2009
2010
2011
2012
Source: IDLC Research
Sector Performance:
Sector
Index 2011
Index 2012
Food & Allied
396.28
493.78
24.61%
Telecom
107.13
129.90
21.25%
Cement
134.28
141.54
5.41%
Power
166.45
161.04
-3.25%
Life Insurance
218.86
204.94
-6.36%
IT
130.47
115.80
-11.24%
Pharmaceuticals
142.03
125.59
-11.57%
Tannery
174.99
149.99
-14.28%
Textile
218.44
181.70
-16.82%
NBFI
266.43
212.92
-20.08%
Miscellaneous
188.40
149.77
-20.50%
General Insurance
247.75
196.65
-20.63%
75.02
58.13
-22.52%
Bank
192.49
142.98
-25.72%
Engineering
274.04
195.63
-28.61%
Services
145.54
86.34
-40.68%
Jute
407.78
227.35
-44.25%
Paper
320.47
154.42
-51.82%
Ceramic
%Change
Since market was in backtrack, most of the sectors
underperformed in 2012. In the Equity segment, only three
Sectors posted positive return. Of the three positive movers, Food
& Allied topped (24.61%), followed by Telecom (21.25%) and
Cement (5.41%). Notably, movement of large cap scrips (BATBC,
GP, Heidelberg) played a strong role in pushing the sectors
upwards. In addition, newly listed BSCCL added significantly to
telecom sector.
Meanwhile, heavyweight bank sector lost 25.72% over 2012,
followed by other financial sectors (NBFI -20.08%, Non-Life
Insurance -20.63%). As financial sectors hold approximately 38%
of total market capitalization, poor performance of financial
sector acted as a prime catalyst behind DSE 2012 performance. In
addition, Engineering and Textile lost 28.61% and 16.82%
respectively. Amid other major sectors, Fuel & Power, Life
Insurance and Pharmaceuticals beat DGEN despite having
negative performance (-3.25%, -6.36% and -11.24% respectively).
Source: IDLC Research
3|Page
Capital Market Review 2012
Cap Wise Movement: Mid Caps Outperform
Cap Wise Stock Movement 2012
Globally, small cap stocks are expected to outperform large and
mid caps in a volatile market like ours. However, contrary to the
common, large and mid caps have outperformed over small,
Mini and Micro caps in DSE in the year 2012. On a YoY basis,
Mid caps lost the least, 15.4%, while mini caps lost most, 25.9%
over 2012.
20.00%
0.00%
-20.00%
-17%
-15%
Large
Mid
-40.00%
-23%
-26%
-24%
Small
Mini
Micro
Source: IDLC Research
Market Capitalization and Impact of IPOs
Fuel & Power
11.34%
12.91%
1.57%
Pharma
8.49%
8.09%
-0.40%
NBFI
9.15%
8.08%
-1.08%
Engineering
5.12%
4.14%
-0.98%
Cement
1.96%
4.10%
2.14%
Textile
2.82%
3.54%
0.72%
Food
2.76%
3.31%
0.55%
Life Insurance
2.58%
2.87%
0.29%
Non Life Insurance
2.97%
2.78%
-0.19%
Travel & Leisure
0.53%
2.66%
2.13%
Mutual Fund
1.58%
2.21%
0.62%
Miscellaneous
2.95%
1.66%
-1.29%
Ceramic
1.45%
1.22%
-0.23%
Tannery
0.69%
0.63%
-0.06%
Service
0.73%
0.48%
-0.25%
IT
0.21%
0.27%
0.06%
Corporate Bond
0.36%
0.20%
-0.16%
Jute
0.04%
0.02%
-0.02%
Paper & Printing
0.04%
0.02%
-0.02%
Meanwhile, IPOs helped a number of sectors to increase their
MCAP share in the market, notably Telecommunication
(+3.03%), Travel & Leisure (+2.13%), and Fuel & Power (+1.57%).
In addition, MCAP of Cement (+2.14%) saw improvement due to
good performance of large cap HEIDELBERG.
MCAP Addition by IPOs in 2012 (BDT Mn)
Travel & Leisure
Telecommunication
Textile
Mutual Funds
Engineering
Fuel & Power
Life Insurance
IT
NBFI
37,153
17,325
15,817
8,221
5,411
2,136
1,965
1,847
1,751
40,000
3.03%
35,000
-6.45%
14.13%
30,000
26.67%
11.10%
25,000
33.12%
Telecommunication
20,000
Bank
Sector
With most of the sectors posting negative returns, aggregate
market capitalization shrank by 8%. However, effect of the
shrinking was uneven across the sectors. The largest sector,
Banks shrank by 6.45%, as the entire sector experienced
significant erosion as expectations were pessimistic over Bank
provisioning guidelines.
15,000
YoY
Change
2012
10,000
Industry
Cap 2012
5,000
Industry Cap
2011
-
Sector MCAP as a % of Total MCAP
Source: IDLC Research
Source: IDLC Research
Momentum in Primary Market:
After 2010 Dec crash, primary market was very much depressed in 2011, as investor sentiment was unfavourable towards new
issues in a distressed market. However, the situation turned in 2012, and the long depressed primary market seems to gain
momentum.
After staying low since 2010 Dec market crash, regulators finally shook off the go-slow stance towards new issues. As regulators
started rolling on the issues, the primary market got a momentum. During 2012, 14 IPOs (10 equity stocks and 4 Mutual Fund) got
4|Page
Capital Market Review 2012
listed at DSE, adding a total of BDT 91.63 Bn to market capital. Out of the 10 Equity stocks, ENVOYTEX was the largest in terms of
public issue size, while UNIQUEHRL was largest in terms of MCAP addition to the market.
As part of the package announced in late November 2011, Bangladesh Securities and Exchange Commission (BSEC) put a 20%
quota in most of these IPOs for affected investors, which acted as a driver to boost up sentiment. The buoyancy put some liquidity
pressure on secondary market as well. Having multiple IPO subscriptions during the same month often channelled some liquidity
from secondary market.
IPOs in 2012
Sl.
No.
Name of Issue
Listing Date
Trading Date
Public Issue
BDT mn
MCAP
BDT mn
1
AB Bank 1st Mutual Fund (ABB1STMF)
11-Jan-12
NLI First Mutual Fund (NLI1STMF)
6-Feb-12
29-Jan-12
27-Feb-12
1,500
2
458
1,560
421
3
First Bangladesh Fixed Income Fund (FBFIF)
22-Feb-12
19-Mar-12
5,000
5,050
4
GSP Finance Company (Bangladesh) Limited (GSPFINANCE)
27-Mar-12
9-Apr-12
500
1,751
5
Padma Islami Life Insurance Limited (PADMALIFE)
8-Apr-12
18-Apr-12
120
1,965
6
GPH Ispat Limited (GPHISPAT)
8-Apr-12
19-Apr-12
600
5,411
7
NCCBL Mutual Fund-1 (NCCBLMF1)
10-May-12
24-May-12
1,000
1,190
8
GBB Power Limited (GBBPOWER)
20-May-12
13-Jun-12
205
2,136
17,325
Bangladesh Submarine Cable Company Limited (BSCCL)
29-May-12
10
Saiham Cotton Mills Limited (SAIHAMCOT)
29-May-12
14-Jun-12
24-Jun-12
310
475
3,828
11
Unique Hotel & Resorts Limited (UNIQUEHRL)
14-Jun-12
2-Jul-12
260
37,153
12
Aamra Technologies Limited (AAMRATECH)
14-Jun-12
4-Jul-12
216
1,847
13
Generation Next Fashions Limited (GENNEXT )
15-Nov-12
5-Dec-12
300
4,837
Envoy Textiles Limited (ENVOYTEX)
3-Dec-12
9-Dec-12
900
7,153
11,843
91,626
9
14
Total
Source: IDLC Research
Regulatory Overhauls and Market Developments
While 2012 seems another poor year from return perspective, it does incorporate significant regulatory changes and progresses.
The bourse saw some significant structural changes, including the following:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Implementing Mandatory shareholding requirement from BSEC by corporate directors
Development of draft guidelines on Research and Investment Advisor services
Amending Margin Loan Rules
Progress in Omnibus account closeout
Developing BSEC Roadmap for capital market
Initiation of demutualization process for the Exchange
Implementing New MSA-Plus Software for Trading
Amendment in the Mutual Fund Rules
Inaugurating Surveillance system by BSEC
Progress in introducing new Indices for DSE
While immediate impact was not significant for most of these events, we do expect mid and long term impact of these changes in
market development. Post a crash, such developments are of prima essential for restoring market confidence, and 2012 proved
more as a year of development than another depressing year.
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Capital Market Review 2012
Disclaimer: This Document has been prepared and issued by IDLC Investments Limited on the basis of the public information available in the
market, internally developed data and other sources believed to be reliable. Whilst all reasonable care has been taken to ensure that the facts
& information stated in the Document are accurate as on the date mentioned herein. Neither IDLC Investments Limited nor any of its director,
shareholder, member of the management or employee represents or warrants expressly or impliedly that the information or data of the
sources used in the Document are genuine, accurate, complete, authentic and correct. Moreover none of the director, shareholder, member
of the management or employee in any way be responsible about the genuineness, accuracy, completeness, authenticity and correctness of
the contents of the sources that are publicly available to prepare the Document. It does not solicit any action based on the materials contained
herein and should not be construed as an offer or solicitation to buy sell or subscribe to any security. If any person takes any action relying on
this Document, shall be responsible solely by himself/herself/themselves for the consequences thereof and any claim or demand for such
consequences shall be rejected by IDLC Investments Limited or by any court of law.
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