Introduction
Before diving into the various types of stocks available in the stock market, it’s important to have a basic understanding of what stocks are and how stocks work in the stock market. There we will also cover the variants of stocks available in the National and international stock market.
In this article you are going to know all about stocks you need to know, Let’s dive into it.
What are stocks and how does it work?
stocks represent ownership in a company and are also known as shares or equities. When you buy a stock, you become a partial owner of the company, which means you have a claim on its assets and earnings and entitles you to certain rights and benefits. Here’s a breakdown of what stocks or shares are:
Ownership:
When you purchase stocks, you are essentially buying a piece of the company. The ownership stake you hold gives you a claim on the company’s assets, earnings, and even a say in certain company decisions.
Dividends:
Some companies distribute a portion of their profits to shareholders in the form of dividends. Dividends are typically paid out on a regular basis (such as quarterly) and provide shareholders with a share of the company’s earnings. Not all companies pay dividends, as some may choose to reinvest their profits back into the business for growth.
Capital Gains:
The value of a company’s stock can fluctuate based on various factors, including market conditions, company performance, industry trends, and economic factors. If the value of the stock increases after you purchase it and you sell it at a higher price, you’ll realize a capital gain. Which in general in Bangladesh’s stock market we called trading.
How many sectors of stocks are available in Bangladesh
In the stock market of Bangladesh, you can find various types of stocks representing companies from different sectors.here are some common types of stocks available on the Dhaka Stock Exchange (DSE) and the Chittagong Stock Exchange (CSE):
- Banking Stocks:
Banking stocks in Bangladesh represent shares of banks that are listed on the country’s stock exchanges. These stocks provide investors with the opportunity to gain ownership in some of the leading Banks in Bangladesh. The banking sector in Bangladesh plays a crucial role in the country’s economy, offering a wide range of financial services including loans, deposits, remittances, and more. Investing in banking stocks allows individuals to participate in the growth and performance of the banking industry, which is closely tied to the overall economic health of the nation.
- Cements Stocks:
Cement stocks in Bangladesh encompass shares of companies operating in the cement industry and listed on the country’s stock exchanges. The cement sector is a vital component of the nation’s construction and infrastructure development. Bangladesh has experienced rapid urbanization and infrastructure projects, leading to a growing demand for cement products. Investing in cement stocks offers individuals the opportunity to become stakeholders in companies that are instrumental in supplying construction materials for residential, commercial, and infrastructure projects.
- Ceramics Stocks:
The ceramics sector plays a pivotal role in the country’s manufacturing landscape, producing a diverse range of products including tiles, sanitaryware, and tableware. With the growth of the real estate and construction sectors in Bangladesh, the demand for ceramics products has been on the rise. Investing in ceramics stocks offers individuals an opportunity to be part of an industry crucial to both domestic consumption and potential export markets.
- Corporate bond Stocks:
Corporate bond stocks in Bangladesh refer to shares of companies that issue corporate bonds, which are debt securities issued by corporations to raise capital. These bonds are traded on the stock exchanges in the country. Investing in corporate bond stocks allows individuals to participate in the corporate debt market, where companies raise funds by borrowing from investors.
These bonds typically offer regular interest payments (coupon payments) to bondholders and return the principal amount upon maturity. Corporate bond stocks can provide investors with a steady income stream and a potential alternative to traditional equity investments.
- Engineering Stocks:
Engineering stocks in Bangladesh encompass shares of companies operating in the engineering sector and listed on the country’s stock exchanges. The engineering industry plays a massive role in the nation’s development, contributing to sectors like construction, infrastructure, manufacturing, and more. Investing in engineering stocks offers individuals the opportunity to become stakeholders in companies involved in designing, constructing, and maintaining various projects and systems.
- Financial Institutions Stocks:
These stocks represent a diverse range of non-banking financial entities, all of which contribute significantly to the nation’s financial sector. Bangladesh’s burgeoning economy and increasing financial inclusion have led to a growing demand for banking and financial services, thereby impacting the performance of financial institution stocks.
- Food and Allied Stocks:
Food and allied stocks in Bangladesh form a vital sector that mirrors the country’s evolving consumer preferences and economic growth. Comprising companies engaged in food production, processing, distribution, and related industries, these stocks capture the essence of a nation where food is not only a basic necessity but also a significant cultural aspect. With a population of over 160 million, the demand for diverse and quality food products remains robust, driving the performance of food and allied stocks. Factors such as changing dietary habits, urbanization, and increasing disposable income play a crucial role in shaping the sector’s trajectory. As Bangladesh continues to develop and modernize its agriculture and food production, investors closely monitor these stocks for potential opportunities.
- Fuel and power Stocks:
This category encompasses companies involved in energy generation, distribution, and related services, including both conventional and renewable sources. Bangladesh’s rapid economic expansion and increasing urbanization have led to a heightened demand for energy, making fuel and power stocks integral to the country’s development. The government’s initiatives to diversify the energy mix by incorporating renewable sources, such as solar and wind, have further added to the sector’s significance. Investors keen on Bangladesh’s economic prospects closely monitor these stocks as they reflect the nation’s energy consumption patterns and overall industrial health.
- Information Technology (IT) Stocks:
Information Technology (IT) stocks in Bangladesh represent a rapidly growing and transformative sector that underscores the country’s strides in technological advancement. Comprising companies engaged in software development, IT services, outsourcing, and digital solutions, these stocks encapsulate Bangladesh’s journey towards becoming a digital economy. The sector’s expansion has been fueled by a young and tech-savvy population, increasing internet penetration, and government initiatives promoting digitalization. IT stocks offer investors exposure to innovation and digital transformation, making them an attractive prospect in a globalized world. As Bangladesh positions itself as an outsourcing hub and nurtures its startup ecosystem, IT stocks gain attention as indicators of the country’s evolving technological landscape.
- Jute and Jute Goods Stocks:
Jute and jute goods stocks in Bangladesh symbolize a sector deeply rooted in the country’s heritage and agricultural heritage. These stocks encompass companies involved in jute cultivation, processing, and the production of various jute-based goods. Bangladesh’s historical association with jute, often referred to as the “golden fiber,” remains significant in its economic landscape, despite the diversification of industries. The sector’s revival has been facilitated by growing environmental awareness and a renewed interest in sustainable materials. As jute gains recognition as an eco-friendly and biodegradable resource, jute and jute goods stocks capture the essence of Bangladesh’s efforts to balance tradition with modern environmental values.
- Insurance Stocks:
Insurance stocks in Bangladesh constitute a critical segment within the financial sector, reflecting the country’s evolving risk management landscape. These stocks represent companies engaged in offering various insurance products and services, catering to both individuals and businesses. As Bangladesh’s economy grows and individuals become more conscious of safeguarding their assets and future, the demand for insurance coverage continues to rise. The sector’s performance is influenced by factors such as regulatory changes, macroeconomic trends, and the prevalence of risks such as natural disasters and health emergencies. Insurance stocks offer investors exposure to the country’s economic resilience and the increasing awareness of financial protection.
- Life Insurance Stocks:
Life insurance stocks in Bangladesh play a pivotal role in providing individuals with financial security and long-term planning options. Representing companies specializing in life insurance products, these stocks cater to the growing demand for protection against uncertainties and the desire to secure one’s family’s future. With an expanding middle class and increasing awareness about the importance of life insurance, this sector has witnessed notable growth. Bangladesh’s economic progress and changing demographic trends contribute to the sector’s significance, as people seek comprehensive coverage for themselves and their loved ones.
- MISCELLANEOUS Stocks:
Miscellaneous stocks in Bangladesh encompass a diverse range of companies that don’t fall under more specialized sectors. These stocks often represent businesses engaged in unique and niche areas, spanning from consumer goods to manufacturing and other distinct industries. This category underscores the versatility and complexity of the country’s economy. The performance of miscellaneous stocks can be influenced by a variety of factors, including consumer trends, market competition, technological advancements, and regulatory changes. Investors interested in these stocks seek opportunities beyond the conventional sectors, looking for growth potential in unconventional and emerging industries.
- Mutual Funds Stock:
Mutual fund stocks in Bangladesh form a crucial avenue for investors to access diversified portfolios and participate in the financial markets. These stocks represent investment vehicles managed by professionals who pool funds from various investors to invest in a diverse range of assets, such as stocks, bonds, and other securities. Mutual funds provide retail investors with the opportunity to benefit from professional expertise, risk diversification, and the potential for capital appreciation. As the Bangladeshi market matures and investor awareness grows, mutual funds have gained popularity for their convenience and risk-sharing benefits. The performance of mutual fund stocks is closely tied to the performance of the underlying assets within the fund. Investors in Bangladesh often assess factors such as fund management quality, expense ratios, historical returns, and market conditions when considering mutual fund investments.
- Paper and printings Stocks:
Paper and printing stocks in Bangladesh encompass a sector that plays a vital role in communication, packaging, and documentation within the country’s diverse industries. These stocks represent companies engaged in paper production, printing services, and packaging solutions. As Bangladesh’s economy continues to grow, the demand for paper and printing products remains resilient, serving sectors ranging from education and publishing to manufacturing and consumer goods. The sector’s performance is influenced by factors such as technological advancements, environmental considerations, and shifts in consumer preferences. Given the sector’s relevance across industries, investors often view paper and printing stocks as indicators of economic activity and business development.
- Pharmaceuticals and chemicals Stocks:
Pharmaceuticals and chemicals stocks in Bangladesh represent a dynamic and essential sector that contributes significantly to the country’s healthcare and industrial landscape. These stocks encompass companies involved in pharmaceutical manufacturing, research, development, and chemical production. With a growing population and increasing healthcare awareness, the demand for pharmaceutical products remains robust. Bangladesh has established itself as a global supplier of generic pharmaceuticals, and this sector’s growth is driven by factors such as domestic and international demand, regulatory compliance, and advancements in medical research. Pharmaceuticals and chemicals stocks offer investors exposure to a sector with potential for both domestic and international expansion.
- Services and Real estate Stocks:
Services and real estate stocks in Bangladesh encompass a sector that mirrors the country’s urbanization and evolving consumer preferences. These stocks represent companies engaged in various service industries such as hospitality, telecommunications, and real estate development. Bangladesh’s rapid urban growth has propelled demand for modern infrastructure, commercial spaces, and housing, driving the performance of real estate stocks. Additionally, the services sector, including telecommunications and hospitality, has expanded as the population becomes more connected and urbanized. Investors interested in this sector often analyze factors like urban development trends, demographic shifts, and regulatory policies to assess investment opportunities.
- Tannery Industries Stocks:
Tannery industries stocks in Bangladesh represent a unique sector that intersects with the country’s history, economy, and environmental concerns. These stocks encompass companies involved in leather production, processing, and related activities. Bangladesh has a longstanding tradition in leather manufacturing and exports, contributing significantly to its economy. However, the sector has faced challenges related to environmental sustainability due to its impact on water pollution and waste management. Over recent years, efforts have been made to address these concerns, including relocating tannery clusters to a centralized, environmentally regulated area. Tannery industries stocks offer investors insight into the sector’s ability to adapt to changing environmental standards and market demands. Investors considering these stocks should carefully evaluate factors such as compliance with environmental regulations, export potential, and innovation in sustainable practices, recognizing that the sector’s growth potential is intertwined with its ability to balance economic development with ecological responsibility.
- Telecommunication Stocks:
Telecommunication stocks in Bangladesh constitute a dynamic and rapidly evolving sector that reflects the country’s technological progress and increasing connectivity. These stocks represent companies engaged in providing telecommunications services, including mobile and internet services. Bangladesh’s expanding population, coupled with growing smartphone adoption and internet penetration, has led to a surge in demand for telecommunication services. This sector’s performance is influenced by factors such as network expansion, data usage trends, regulatory policies, and advancements in technology. Investors interested in telecommunication stocks often view them as indicators of digitalization and economic growth.
- Textile Stocks:
Textile stocks in Bangladesh form a cornerstone of the country’s economy, representing a sector deeply rooted in its industrial heritage. These stocks encompass companies involved in textile manufacturing, apparel production, and related industries. Bangladesh has emerged as a global hub for textile and garment manufacturing due to its competitive labor costs and export-oriented approach. The sector’s performance is influenced by factors such as international demand, trade agreements, and market trends. As one of the largest employers in the country, textile stocks also hold significant social and economic importance. Investors interested in this sector often analyze factors like global fashion trends, supply chain efficiency, and labor conditions to gauge investment opportunities.
- Travel And Leisure Stocks:
Travel and leisure stocks in Bangladesh represent a sector poised to capture the growing desire for recreational activities and exploration. These stocks encompass companies engaged in hospitality, tourism, entertainment, and related services. Bangladesh’s increasing middle class and rising disposable income have led to a surge in domestic and international travel, driving demand for hotels, restaurants, and entertainment venues. The performance of travel and leisure stocks is influenced by factors such as tourism trends, consumer sentiment, and economic stability. As the country strives to enhance its tourism infrastructure and promote cultural and natural attractions, investors keen on this sector analyze potential growth opportunities.
Please note that the availability of specific types of stocks can change over time due to market dynamics, regulatory changes, and company listings or delistings.
Categories of Companies in the Bangladesh Stock Market and Settlement Cycles
In the Bangladesh stock market, companies are categorized into A, B, N, and Z categories based on their compliance with certain criteria. These categories have specific implications for investors, particularly regarding the settlement cycle for buying and selling shares.
A-Category Companies:
A-Category companies are known for their regularity in holding Annual General Meetings (AGMs) and have declared a dividend at the rate of 10 percent or more in the last English calendar year. For investors, this category offers a shorter settlement cycle. If you buy shares from Category A, your shares will mature in the T+2 settlement cycle. This means you can sell the shares you purchased after 2 working days, excluding Friday, Saturday, bank holidays, and exchange holidays.
B-Category Companies:
B-Category companies also hold regular AGMs, but they have failed to declare a dividend at a rate of at least 10 percent in the last English calendar year. For investors, the T+2 settlement cycle applies to shares from this category. Similar to Category A, you can sell these shares after 2 working days.
N-Category Companies:
N-Category companies comprise newly listed companies, with the exception of green-field companies. These companies are subject to a different settlement cycle. Your shares from Category N will also mature in the T+2 settlement cycle, similar to Categories A and B. This means you can sell these shares after 2 working days.
Z-Category Companies:
Z-Category companies are characterized by their failure to hold AGMs when due, not declaring any dividend based on annual performance, or not operating continuously for more than six months. If a company’s accumulated loss, after adjusting for revenue reserves, exceeds its paid-up capital, it is also placed in Category Z. For investors, the T+3 settlement cycle applies to shares from this category. This means you can sell these shares after 3 working days, excluding Friday, Saturday, bank holidays, and exchange holidays.
Understanding these categories and their associated settlement cycles is essential for investors in the Bangladesh stock market. It influences the timing of when you can buy and sell shares, allowing for effective planning and management of your investments.
Conclusion
In conclusion, by understanding the different types of stocks available and their respective sectors, investors can make more educated decisions that align with their financial goals, risk tolerance, and market outlook. As with any investment, seeking advice from financial experts and staying updated on market trends will contribute to a successful investment journey.
