The market cap to GDP (Gross Domestic Product) ratio, which reflects the depth of the capital market, marginally rose in the premier bourse at the end of 2018.
But the ratio is still much lower than the ratios of other countries including neighbouring ones.
According to information of Dhaka Stock Exchange (DSE), the percentage of the market cap to GDP ratio stood at 17.21 on December 27, 2018.
At the end of June, 2018 the ratio was 16.94 per cent in the premier bourse.
Market cap is the value of a publicly traded company's outstanding shares at a given time.
The market cap to GDP ratio is a measure of the total value of all publicly traded stock in a country, divided by that country's GDP.
According to market experts, a low market cap to GDP ratio reflects insufficient depth of the stock market.
They repeatedly stressed on listing of more big companies having good fundamentals to enhance the market cap to GDP ratio for the sake of increasing the depth of the country's capital market.
According to the DSE information, the market cap to GDP ratio is 110.33 per cent in Thailand Stock Exchange, 86.34 per cent in Bombay Stock Exchange, 28.25 per cent in Karachi Stock Exchange, 23.68 per cent in Colombo Stock Exchange, 142.24 per cent in Bursa Malaysia and 70.01 per cent in Nepal Stock Exchange.
The market cap to GDP ratios gradually rose in these stock exchanges but the ratio gradually declined in the premier bourse of Bangladesh.
The ratio was 33.73 per cent in the fiscal year (FY) 2009-10, 29.99 per cent in FY 2010-11, 22.82 per cent in FY 2011-12, 21.55 per cent in 2012-13, 24.77 per cent in 2013-14, 20.04 per cent in FY 2014-15, 18.42 per cent in 2015-16, 19.43 per cent in 2016-17 and 16.94 per cent in 2017-18 in the DSE.
The growth of the market cap could not keep pace with the country's economic growth as the GDP size gradually rose in recent years.
The country's GDP growth rate was 5.57 per cent in FY 2009-10, 6.46 per cent in FY 2010-11, 6.52 per cent in FY 2011-12, 6.01 per cent in FY 2012-13, 6.06 per cent in FY 2013-14, 6.55 per cent in FY 2014-15, 7.11 per cent in FY 2015-16, 7.28 per cent in FY 2016-17 and 7.65 per cent in FY 2017-18.
Experts and stakeholders blamed at least two reasons -- the unsuccessful initiatives to encourage the local conglomerates and offload shares of state-owned enterprises (SoEs) -- for the market cap remaining at low level.
Local conglomerates like Akij Group, Abul Khair Group and City Group are yet to go public despite efforts from the two bourses of the country in recent years.
Moreover, the free float of the multinational companies should be enhanced to deepen the depth of the market, stock market analysts pointed out.
They also said the low ratio also highlights the fact that the capital market is yet to be properly used for long-term investments.
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