WELCOME TO

MY PRESENTATION
ON
Analysis of basic parameters of
stock
Highlighting DSE

Muhammad Jakir Hossain

ID No:513132037

Preliminaries
A stock exchange is a form of exchange which provides
services for stock brokers and traders to trade stocks, bonds,
and other securities.
Stock exchanges also provide facilities for issue and
redemption of securities and other financial instruments, and
capital events including the payment of income and dividends.
Securities traded on a stock exchange include stock issued by
companies, unit trusts, derivatives, pooled investment products
and bonds.
To be able to trade a security on a certain stock exchange, it
must be listed there.

Background of Dhaka Stock

Exchange
East Pakistan Stock Exchange Ltd was finally named as Dhaka
Stock Exchange (DSE) on 14 May 1964.
Although incorporated in 1954, formal trading started in 1956.
Prior to independence in 1971, the number of listed companies
in DSE was 196 with a total paid up capital of Tk. 4 billion.
The total number of listed securities is now 378.

Policies of Dhaka Stock Exchange (DSE)

DSE can introduce automate monitoring systems that may control

price manipulation, malpractices and inside trading.
It can make sure all the listed companies publish their annual reports
with actual and proper information that can ensure the interest of the
investors.
To force the listed companies to declare and pay regular dividends
through conducting Annual General Meeting.
To make arrangement to set up merchant banks, investment banks and
floatation of more mutual funds particularly in the private sectors.
More banks, insurance companies and other financial institutions
should be encouraged to deal in share business directly.
The management of DSE should be vested with professionals and
should not in any way be linked with the ownership of stock exchange
and other firms.

Functions of Dhaka Stock

Exchange (DSE)
Listing of Companies
Providing the screen based automated trading of listed
Securities
Settlement of trading
Granting approval to the transaction
Market Administration & Control
Market Surveillance
To train the investors about fundamentals to deal in share
transactions.
To punish the member brokers for breaching of contract.

Nature of Dhaka Stock Exchange

Public Market:
Only trading of market lot share is done here through automatic
matching.
Spot Market:
Spot transactions are done here through automatic matching
which must be settled within 24 hours.
Block Market:
A place where bulk quantities of shares are traded through pick
and fill basis.
Odd Lot Market:
Odd lot scripts are traded here based on pick and fill basis.

Listed Companies in DSE

Last One Year Performance of DSE

Basic market parameters

Stock parameter is the factors that eventually control the stock price at the
stock exchange. A better understanding of these parameters will help you to
trade in stocks. Here we are presenting definitions of some of the most
important parameters:
Face Value Face value of a stock represents the nominal value that the
issuer of the stock decided for that stock.
Book Value - Book Value of stock is determined by dividing the net worth
of the company divided by the number of shares outstanding. The net worth
of the company is total asset of the company minus the liabilities.
Market Price Market price indicates the last traded price at a particular
stock exchange where the stock is listed at a given day.
Market Capitalization market capitalization of company is determined by
multiplying the market price of the stock with the total number of issued and
outstanding stock in the market.

Basic market parameters(contd)

Volume Volume of stock is average of total traded stocks at

the exchange over a period of time.
Earnings per share - EPS is determined by dividing the net
profit of the company, the aggregate net profit of the last four
quarters, by fully diluted equity capital.
Price to Earnings Ratio (P/E) P/E ratio is determined by
dividing the closing price of a stock with the Earning per
Share or EPS of the stock.
Beta Beta shows the sensitivity of stock to the market. It
indicates how much the scrip moves at a unit change in the
market. The Beta for a stock can be negative or positive. When
the Beta for a stock is negative it means that the share moves
in the opposite direction that of the market.

Recent market highlights of top 20 shares

Recent market highlights of top

20 shares(contd)

Recent market highlights of top

20 shares(contd)

Problems and Limitations of

Dhaka Stock Exchange
Price Manipulation
It has been observed that the share values of some profitable companies have been
increased fictitiously some times that hampers the smooth operation of DSE.
Delays of settlement
Financing procedures and delivery of securities sometimes take an unusual long time for
which the money is blocked for nothing.
Irregular payment dividends
Some companies do not hold Annual General Meeting and eventually declare dividends
that do not reflect the real or actual financial positions of the company and ultimately
shareholders become confused.
Selection of membership
Some members being the directors of listed companies of DSE look for their own
interest using the internal information of share market.

Problem and Limitations of Dhaka Stock Exchange (contd)

Improper Financial Statement

Many companies of DSE do not focus real position of the company
as some audit firms involve in corruption while preparing financial
statements. As a result the shareholders as well as investors do not
have any idea about position of the company.
Technical problems and political infighting
The concept of centralization of securities market has not been
implemented that arises technical problems and political infighting.
Lack of skilled manpower
In DSE as well as financial and non financial institutions involved in
the securities market.
The lack of proper policy
Absence on framework that provides incentives and protection to
investors.

Suggestions to improve the activities of DSE

Re-establishment of Security Exchange Commission is highly necessary at

this moment. SEC is supposed to have honest, skilled, knowledgeable,
clean imaged people.
DSE is composed of 25 members board. There are 12 members of stock
broker and 12 of dealers and the rest is chief executive officer. So board
members are the market player and controller as well. So it is easy for them
to manipulate market. So Demutualization is needed now.
There should be a supportive atmosphere between Dhaka Stock Exchange
Ltd (DSE) and Security Exchange Commission (SEC). Their goal should
be the same to work for the betterment of the market.
Bangladesh bank should impose bar or circular on the investment criteria
for the private banks and other financial institutions.
Conducting in-depth investigations based on preliminary enquiries/analysis
made into trading of the scrip. In case of irregularities observed , necessary
actions are initiated or investigation case forwarded to SEC, if necessary
through the CEO.

Suggestions to Improve the

Activities of DSE(contd)
To force the listed companies to publish their annual reports with actual and proper
information that can ensure the interests of investors.
To introduce automated monitoring system that may control price manipulation,
malpractices and inside trading.
There should be a new regulation for the placement business on the eve of pre-IPO
state.
To introduce full computerized system for settlement of transactions.
To force the listed companies to declare and pay regular dividends through conducting
Annual General Meeting.
The department may issue verbal/ written warning to member/s when market
irregularities in the scrip are suspected. The department, through the CEO, imposes
penalty or suspend the member/s who are involved in market irregularities, based on the
input/ evidence available from investigation report.
To take remedial action against the issues of fake certificates.
To punish the member brokers for breaching of contract.

Suggestions to Improve the

Activities of DSE(contd)

Strengthening market regulation and supervision

Developing the capital market infrastructure
Modernizing capital market support facilities
Increasing the limited supply of securities in the market
Developing institutional sources of demand for securities in the
market and
Improving policy coordination.
Liaising with Compliance Officers of companies to obtain
comments of the company on various price sensitive corporate news
items appearing in selected News Papers.
Comments received from the companies are disseminated to the
market by way of online news bulletin.
Investigations based on rumor verifications are carried out, if
required, to detect cases of suspected insider trading.

Concluding remark
The market is still struggling to be stable.
Market is trying to recover from its bearish mood but we have
observed still much confusion, lack of cooperation among the
government, DSE members, and regulators.
All are waiting for a stable market so that investors get
confidence to put their valued money in this market.
I think it is the high time government should sit with all the
elements of capital market and take proper steps to stabilize
the market for the greatest interest of the small investors as we
know they are heart of this market.

THE END

THANKS
TO ALL
FOR YOUR
PATIENT BEING