Stocks or shares are the fractional ownership of a company. Initially, these stocks are released through an Initial public offering by a company who are looking for small investors who are willing to bolster their capital. Colloquially, buying a stock makes an individual a fractional owner of the company in coherence with the number of stocks owned. For instance, if a company has 1000 stocks, buying a hundred will make the buyer a 10% owner of the company.
Stock prices of a company are dependent on the market demand and supply for the stocks in concern, along with the buyer’s perceived company performance. In Bangladesh, all stock market activities are overseen and supervised by the Bangladesh Securities & Exchange Commission (BSEC).
To date, to invest in any stocks in Bangladesh, there are two stock exchange platforms, namely Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE).
This article provides insight on how to start investing in Dhaka Stock market.
Investing in Stocks
To start investing in Dhaka Stock market, you must have:
• Must have a valid passport or NID and a bank account.
• Need to select a brokerage house and open a BO (Beneficiary Owner’s) account there. A brokerage house is an organization that facilitates investing and trading in stock exchanges.
• It is possible to open BO accounts individually or together with another person, both online or offline. Opening the BO account entails
- Having one’s passport-size photos.
- Photocopies of NID/passport.
- The applicant’s bank details.
- Passport-size photos and photocopies of the NID of the nominee must also be provided.
- Account opening charges range from BDT 500 to BDT 1000.
How to buy and sell stocks?
Stocks can be bought and sold in three ways.
- Being physically present at the brokerage house
- Contacting a broker
- Using the DSE mobile app
Brokerages houses usually charge a commission amount that ranges from 0.25% to 0.50% on the principal stock buying amount.
Some of the top brokers from whom you can buy stocks are:
1. LankaBangla Securities Limited
Founded in 1997, LankaBangla Securities Limited started its journey as a joint-venture financial institution in multinational collaboration with a license from Bangladesh Bank.
At present, LankaBangla is the country’s leading integrated financial services provider that include Corporate Financial Services, Retail Financial Services, SME Financial Services, Liability Management, Stockbroking, Corporate Advisory and Wealth Management Services.
The company is renowned for their brokerage services and is considered to be the best in the country, due to their reliable reputation earned throughout the years and customer centric approach in introducing convenient means, such as mobile applications and systems that provides immense accessibility to its customers.
2. Royal Capital Ltd.
Operating since 1996, Royal Capital Limited offers services on both the Dhaka Stock Exchange (DSE) and the Chittagong Stock Exchange (CSE) trading platforms. The company currently serves over 100,000 clients and is spread over 15 locations in 8 cities throughout the country.
To make trading more convenient for the customers, the company introduced their online platform called “Royal Touch”. Such initiatives and dedication made them one of the most popular brokerage houses of the country.
3. Islami Bank Securities Limited
Established in 2010, Islami Bank Securities Limited is a leading brokerage house of Bangladesh. The company is renowned for providing their customer value for money services and dedicated engagement to maximize client profits.
4. BRAC EPL Stock Brokerage
Operating since 2000, BRAC EPL STOCK BROKERAGE is one the most renowned brokerage houses of the country. The company provides services to retail clients, non-resident Bangladeshis (NRBs) international institutions, and domestic institutions. The company is a member of both the Dhaka Stock Exchange (DSE) and the Chittagong Stock Exchange (CSE) and has 8 branches throughout the country.
5. EBL Securities Limited
EBL Securities Limited (EBLSL) is a wholly owned subsidiary of Eastern Bank Ltd. The company is a member of both the Dhaka Stock Exchange (DSE) and the Chittagong Stock Exchange (CSE). The company is renowned providing different types of services to prominent corporate clients, individual investors, financial institutions, etc. The company has branches in Kawran Bazar and Motijheel of Dhaka, as well as a branch in Chittagong.
Check out this list of largest public companies in Bangladesh.
What stocks should you buy?
The biggest factor that an individual must be aware of while investing in stocks is recognizing the expectation and the mode of returns from these stocks. Primarily, there are two main ways open to earn from a stock, namely capital gains and dividends.
Capital gains are the profits made from selling a stock at a higher price compared to the buying price. While dividends are the profits shared by a company with its stockholders within a timeframe. Depending on the expected rate of return from the stocks and the mode of stock returns, investments should be made appropriately.
In light of investments, compared to traditional alternatives of stocks, for instance ‘National Savings Certificates (NSCs)’ or ‘Fixed Deposits’, investing in the stock market entails the highest amount of risk. However, investing in the stock market also holds the biggest opportunity for returns. Depending on the risk appetite and the expectation of returns, one should carefully invest in the stock market.
