An overview of Dhaka Stock Exchange Ltd.

17/02/2013 20:09

Capital market is one of the major determinants for economic development through mobilization of scattered resources and their allocation to appropriate areas. The liquidity, solvency and efficiency of the economic system of a country can be better accomplished by a well organized capital market. It acts as an intermediary between investors and corporate seeking additional capital financing. The securities market allows sound listed companies to raise additional capital quickly and cheaply, as they enjoy reputation. A vibrant and liquid securities market encourages increase in savings by offering attractive and rewarding securities in terms of higher return, lower risk and easy option for conversion to cash. Therefore, a vibrant capital market is likely to signal a robust economy.

The capital markets are those for long-term government securities, corporate bonds, stocks, municipal bonds issued by state and local government units, and mortgages. A capital market is a market for both debt and equity securities, where business enterprises and governments can raise long-term funds. It is defined as a market in which money is lent for periods longer than a year, as the raising of short-term funds takes place on other markets e.g., the money market. The capital market includes the stock market (equity securities) and the bond market (debt).

Capital markets consist of the primary market and the secondary market. The primary markets are where new stock and bonds issues are sold via underwriting to investors. The secondary markets are where existing securities are sold and bought from one investor or trader to another, usually on a securities exchange, over the counter, or elsewhere.

Industry and commerce as well as government and local authorities raise capital from the capital market which performs several important functions in the process of economic development. Most important among them are the promotion of savings and investment and efficient allocation of funds among competing uses.

Participants in the capital markets are many. They include the commercial banks, saving and loan associations, credit unions, mutual saving banks, finance houses, finance companies, merchant bankers, discount houses, venture capital companies, leasing companies, investment banks, investment companies, investment clubs, pension funds, stock exchanges, security companies, underwriters, portfolio-managers, and insurance companies.

There are two stock exchanges in Bangladesh: Dhaka Stock Exchange (DSE) & Chittagong Stock Exchange (SEC).Topic of this report is on Dhaka Stock Exchange (DSE)