Guide to investing in the Bangladesh stock market
Author: Md.Mizrab Alam
Published on: 28/Aug/2022
Looking for a way into the stock market in bd? Well, you have made it into the first step by reading this. History has many heroes and fallen ones in the stock market. Some made fortune out of small investments and some lost it all. But you never know, you can be the next Warren Buffett. Let's keep moving to the next step and explore how you can invest in the stock market in bd.
Who is the stock exchange in bd?
A stock exchange is a marketplace where you may buy and sell equities from various businesses. Every stock market in bd has a body in place to monitor and regulate the exchange's operations. The Bangladesh Securities & Exchange Commission (BSEC) is an organization in Bangladesh. Bangladesh has two stock exchanges: Chittagong Stock Exchange (CSE) and the Dhaka Stock Exchange (DSE).
How does the stock market run in Bangladesh?
There are two types of stock market in bd. Primary market and Secondary market in which you can invest.
What is the Primary market?
The main activity of the primary market is IPO for the new companies to enter the stock market in bd. To become a public company a private company needs to offer a public share. So, IPO is offered to the primary market to attract investors to buy shares.
What is a Secondary market?
Investors purchase and sell shares from other investors on the secondary market (think of stock exchanges). This market gives the small investor opportunity to enter the stock market in bd. Investors need to open a BO(Beneficiary Owner’s) Account to trade with other investors.
Choosing the best brokerage house
After understanding how the stock market in bd the first and foremost task is to select a brokerage house. The stock market in bd has many brokerage houses to start your investment with but here comes the question of why you need to choose the best brokerage house. Let’s make a checklist about what to look for in a brokerage house-
Digitalization: The stock market in bd is very competitive so it's best to look for competitive advantages in a brokerage house. Check for digital services offered by the brokerage houses. If the brokerage house has a mobile and web application system for buying and selling shares, make it a top priority.
Background: Look for information about the brokerage. For how long they are in the stock market in bd. Check up their business track record.
Money deposit & withdrawal: Investment and withdrawal should be smooth. The most complicated and lengthy process is to invest in your BO account and withdraw when you want to. The brokerage must offer multiple deposit and withdrawal options. The online transaction feature makes it easy to invest in the stock market in bd.
Read more about
Opening a BO Account
Then comes the second step, you have chosen your brokerage house. Now open a BO(Beneficiary Owner’s) Account. Without a BO account, you can not invest in the stock market in bd. You will be able to buy and sell shares from the stock market in bd through your BO account. To open a BO account a couple of steps you need to follow:
You can open an individual account or a joint account
You must have NID/Passport
Two copy passport size picture
NID/Passport of your nominee
You have to submit these documents to your brokerage house, by 1 or 2 days you will get a confirmation on your BO account opening. After that, you are ready to for making investments in the stock market in bd. If you are still facing difficulties understanding about BO account read more. (link to other post)
Know about company categories
There are more than 600+ companies listed in the stock market in bd under DSE and CSE combined. Before starting investing you need to understand the company categories registered in the stock market in bd. There are four types of companies A, B, N, and Z category.
A category- This category company regularly on holding their Annual General Meetings(AGM) and they have declared 10 percent or more dividends to their shareholders yearly.
B category- This category company is regular in holding their Annual General Meetings(AGM) and they have failed to declare 10 percent or more dividends to their shareholders yearly.
N category- This category refers to the newly registered company in the stock market. According to their dividend declaration and performance, they will be transferred to the other category.
Z category- These category companies have repeatedly failed to hold AGM and didn’t declare any dividends over a year. Also, they are out of operations for more than six months.
To invest in the stock market in bd you must need to know more about company categories. This knowledge will help you make a decision on the best company to make investments.
The phrase "blue chip stock" originates from the world of poker, where different colored poker chips are used to denote different dollar amounts. Most of the time, a blue chip has a higher value than a white chip or a red chip. The stock market in bd has some blue chip companies, investing in these companies may get you the profit that you are looking for. If you examine the stock market in bd you will find mostly blue stocks related to the pharmaceutical and FMCG industry.
In the stock market in bd, you can consider a blue-chip company as a multinational firm that has been in operation for a number of years. Consider businesses that dominate their respective markets. The titans of their industries, blue chip stocks are well-known, well-capitalized, long-term stable plays with promising financial futures in the stock market in bd. They are the corporations that define their industries.
Procrastination and preparation are needed before a heavy or small investment in the stock market in bd. If you are new to the stock market and looking for guidance, these tips and tricks may help you become an expert in the stock market in bd. Before investing, choosing a brokerage house with several features and facilities may increase your chances become a good investor in the stock market in bd. Always check for the company categories and track record of the companies in the stock market in bd.