Banks led the capital market bull run in the outgoing year as investors injected huge amount of funds in the financial scrips with an expectation of better gains.
Market operators said low deposit rates at the banks prompted investors to channel their savings into the stock market.
Banks have been continuously lowering their deposit rates in recent months due to huge amount of idle fund at their disposal.
The average share prices of the bank sector soared by 51 per cent over the year amid optimistic purchasing of bank shares by investors, market operators said.
They said that investors preferred the financial stocks as the share prices of the scrips were lower compared with that of the other scrips.
The key index of the Dhaka Stock Exchange, DSEX shot up by 22.30 per cent, or 1123.25 points, over the year to close at 6,159.30 points on December 24, 2017.
The market capitalisation of Dhaka Stock Exchange increased by 22.44 per cent or Tk 76,601.44 crore to Tk 4,17,845.59 crore. The bank sector contributed most to the increase in the year.
Banks holds 21 per cent of the total market capitalisation followed by telecommunication (18 per cent), pharmaceuticals (13.79 per cent) and energy (10.53 per cent).
Many investors, who were on the sidelines since the 2010-11 market crash, started to return to the market with the bullish momentum of the year.
Former adviser to an interim government Mirza Azizul Islam said that most of the banks declared profits in last three quarters that attracted investors to the sector.
Trading of the bank shares had remained dull since the market crash as these were the worst hit, he said.
The situation changed this year with the upward trend at the market and investors also expected better dividend for the year 2017, he said.
Mirza Aziz, however, said that the regulators should analyse banks’ financial reports carefully against the backdrop of financial scams in the sector.
Asset & Investment Management Services of Bangladesh chief executive director Yawer Sayeed told New Age that investors should be cautious regarding their investment in the banking sector as the sector was going through a tough time with scandals and scams.
Former Merchant Bankers Association president Mohammad A Hafiz said that the price earnings ratio of the banks was lower compared to that of other sectors. As a result, the share prices of almost all the banks increased.
The share prices of state-owned Rupali Bank soared by 120 per cent over the year.
The share prices of Shahjalal Islami Bank, City Bank, BRAC Bank and Trust Bank gained by 113 per cent, 96 per cent, 65 per cent and 75 per cent respectively.
Among the other prominent sectors, the share prices of non-bank financial institutions also gained by 48.63 per cent.
Telecommunication sector was the second highest gainer in 2017 with the help of an increase in the share prices of Grameenphone.
The share prices of the mobile phone operator shot up by 65 per cent so far this year.
Banks led the turnover chart with holding almost 23 per cent of the total turnover of the year so far, replacing the engineering sector that led the chart in 2016.
Engineering sector, however, was the second highest in the turnover chart this year, holding around 14 per cent of the total turnover followed by textile, pharmaceuticals and non-bank financial sectors.
Junk shares also soared in the bullish market. The average share prices of ‘Z’ category shares posted around 80 per cent rise in 2017.
Want stories like this in your inbox?
Sign up to exclusive daily email
More Stories from Stocks