personal portfolio management
TRANSCRIPT
A Report onThe personal Portfolio Management
Submitted To:
Maksudur Rahman Sarker Associate ProfessorDepartment of Accounting & Information SystemsUniversity of Dhaka
Submitted By: Roll
Ibrahim Khan 13090Md.Aslam Hossain 1301013th Batch,Sec:ADepartment of Accounting & Information SystemsUniversity of Dhaka
Date of Submission: 16th April, 2011
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Acknowledgement
All praises and thanks to omnipotent creator for enabling us to complete our report with good
health and sound mind.
At this point, we would like to acknowledge some of the persons who have made a major
contribution to its preparation. At first I would like to thank our honorable course teacher
Maksudur Rahman Sarker who assigned us such important report. We would also like to thank
our Librarian, lab superintendent for making cordial co-operation
Ibrahim Khan &Md. Aslam Hossain
B.B.A (13th batch)
Section: A
Department of Accounting & information systems
University of Dhaka.
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Abstract
Portfolio management is the process of planning and executing a portfolio of investments in order to generate a desired future income stream.This means that portfolio management starts with looking at what one is investing for and how far into the future one is looking. The next stage is to look at how much investors need to invest, how they allocate those investments to meet their goals with reasonable certainty, and how much uncertainty They are willing to bear.
By portfolio management investors try to maximize his return and minimize the risk of his investment by managing the combination of different securities.
When an investor invests in one security, s/he can use expected returns as the measure of securities return and standard deviation or variance as the measure of risk. An investor, who holds a diversified portfolio, cares about the contribution of each security to the expected return and the risk of the portfolio. An investor can maximize the returns of a portfolio by choosing securities with high returns and minimize the risk by diversification of securities. By using completely diversified portfolio, an investor can eliminate most or all unsystematic risk. So the goal of an investor when s/he invests in portfolio of securities is to choose a portfolio with high expected return and low risk. Portfolio management performs this job
Before selecting the companies where to invest, an investor should investor has to analyze economy of that country, industry in which to invest and the companies of the chosen industry. By performing these analysis investors will be able to get idea about the investment environment and investment potentials. He will be able to have knowledge about the level of risk he will be able to bear.
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Origin of the Report
This report was assigned by Maksudur Rahaman Sarket, Associate professor, Department of Accounting & Information Systems, University of Dhaka.
In this report we have tried to analyze the economy of a country, Industries under that economy and the companies under the industries where the investor wants to invest. We have tried to conduct day to day trading from February 1, 2011– March 31, 2011 efficiently.
After the investment period, we have tried to measure the overall performance of our personal portfolio. We also have measured the correlation of our portfolio with the market.
Objective of the Report:
The report has been undertaken with the following objectives:
To determine the overall economic condition of Bangladesh
To analyze the overall condition of Industries of Bangladesh.
To analyze the financial performance of the companies of different industries To learn how to form a portfolio while making any investment To learn how to handle the investment portfolio To get an idea how to measure the portfolio risk and return To get an idea about the market risk and return To relate the performance of our portfolio with the market performance Determining whether funds are over-allocated to any individual stock
or sector Determining the probability that our portfolio will be able to support a
future income stream for a specified period of time Finding the best personal balance of risk and return to meet
investment goals
Methodology:
The report has been prepared by using secondary resources of data. To prepare this report we
have taken the help of some books, different websites, different news papers, different articles
computer lab of the department of Accounting & Information systems.
Limitations:
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There are some limitations that we have faced during preparing the report. First of all, we have
no previous experience like this kind personal portfolio management. In some cases, it was to
possible to get latest data on different issues.
Table of Content
Serial Contents Page No1. Economy Analysis:
Major Trading partner of Bangladesh: 2
Credit rating of Bangladesh: 3
Private sector investment scenario 4
Investment incentives provided in Bangladesh 5
2. Industry analysis 18-22
3 Company Analysis 23-30
4 Personal Portfolio 31-41
5. Portfolio Performance 42-43
6. Conclusion 43
7 Bibliography 44
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Chapter-1: Economy analysis
Introduction:
For the formulation of useful economic policies for the nation, economic analysis is of the utmost significance. Economic policies cannot be obviously based on the basis of the fortunes of a single firm or even a single industry or the price of individual commodity. It is for more fruitful to regulate aggregate employment and national income and to work out a national wage policy.
Economic analysis enriches out knowledge of the functioning of an economy by studying the behavior of national income, output investment, saving and consumption. Moreover, it throws much light in solving the problems of unemployment, inflation, economic instability and economic growth.
General overview of Bangladesh Economy:
particulars AmountGDP at Current Price : Tk. 4,161.55 billionPer Capita GNI : US$ 482
GDP Growth at Constant Price) : 6.71%
Industrial Growth at Constant Price) : 9.56%
Inflation Rate : 6.17%
Investment Rate : 24.97% of GDP
National Savings Rate : 26.61% of GDP
Exports (US$) : US$ 10,526.16 million
Imports (US$) : US$ 13,949.79 million
Exchange Rate:
Foreign currency Tk.US Dollar Tk.69.68Euro Tk.83.32Currencies (2006) British Pound = Tk. 124.86Australian Dollar = Tk. 48.74Japanese - Yen = Tk. 0.56
Swiss Frank = Tk. 52.79
Hong Kong Dollar = Tk. 8.54
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Saudi Riyal - SAR = Tk. 17.64
Foreign Exchange Reserve : US$ 3,877.0 million on (31-12-2006)
Bank Rate : 5.00%
Major Trading partner of Bangladesh:
Bangladesh has direct trade relations with the following countries:
USA, EU Countries, India, China, Japan, South, Korea, Australia, Malaysia, Hong Kong, Taiwan, Indonesia, Pakistan, Thailand, Kuwait, Saudi Arabia, UAE.
Legal framework for Bangladesh economy:
There are number of laws and regulations available in Bangladesh to protect the investment of the investors. These laws and regulations ensure the right of the investors in this country. These laws and practices are as follows
1. The Companies Act 19942. The Industrial Policy 19993. The Import Policy Order 2003-20064. The Bangladesh Export Processing Zones Authority Act of 19805. The Bangladesh Private Export Processing Zones Act of 19966. The Investment Board Act of 1989
Besides these, Investors have to follow the directions and guidelines issued by Bangladesh Bank, National Board of Revenue on different issues.
Credit rating of Bangladesh:
Global rating agency Moody's Investors Service has assigned a sovereign rating of Ba3 to Bangladesh, with a stable outlook for the financial sector in line with S&P’s sovereign rating of BB-/ stable announced earlier. The sovereign credit ratings would give an assessment of the government’s ability and willingness to repay its local and foreign currency debts. Both quantitive and qualitative factors have been considered in deriving the sovereign rating
In the global financial arena the BB- and Ba3 sovereign credit ratings put Bangladesh at a position higher than Pakistan and Srilanka and in the same category of countries like Vietnam, the Philippines, Indonesia and Turkey. Bangladesh has also been categorized by Goldman Sache as one of the next 11 fast growing emerging countries after Brazil, Russia, India and China, which are referred to as BRIC countries
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Both the rating agencies have given high score to Bangladesh because of its continued macroeconomic stability on back of prudent macro-economic policy setting and microeconomic reforms. Both agencies highlighted Bangladesh’s strong and stable economic growth over the past decade. While S&P used the average of 4.2% real capital GDP growth as the barometer. Moody’s highlighted the 6.0% average GDP growth as a major contributor to its positive rating. They have also stressed on the resilience of the Bangladesh economy to external shock as well as domestic stress as positive indicators. Strong and resilient readymade garments(RMG) sectors as well as the continued inflow of workers remittance from abroad, also underpinned the economic growth. The strong growth in country’s foreign exchange reserve has also been rated favorably. Prudent macro-economic management and sound policies have been accredited for price stability as well as a stable exchange rate.
S&P further pointed out the positive impacts of substantial donor engagement that helped improved policy formulation and eased some of the burden of providing education and health services on the government. Moody’s remarked that the conservative institutional frameworks which are supported by capital control have ensured better external balance and price stability. Also the growing role of micro finance institutions has helped to supplement domestic consumption as well as developing a critical social safety net. Debt roll-over risk is also contained by the government’s cash balances in the banking system and the country’s respectable savings rates that provide greater debt absorption capability compared with its peers. There is also less contingent fiscal pressures on the government because outstanding guarantees for non financial state-owned enterprises are relatively low. The banking sector is not reliant on external funding is not likely to pose any serious contingent sovereign risks.
Private sector investment scenario
Private sector activities have expanded enormously in diversified economic fields. It is playing a significant role in the economic development of the country. Country has experienced industrial growth rate all time high nearly double digit (9056%) at the same time manufacturing sectors has experienced double digit growth (40.45%). UNCAD’s LDC Report identified that of the 40 LDCs for which data are available, only 7 have experienced steadily sustained growth and Bangladesh is one of them.
World Bank has recognized Bangladesh as one of the most rapidly growing economy in the recent times and it comment that Bangladesh is 10th most rapidly growing economy among 31 large developing countries with population above 20 million with GDP averaging 5% since 1990.
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Investment incentives provided in Bangladesh:
There are number of incentives available in the Bangladesh for the investors provided issued by Ministry of Finance, Bangladesh Bank, Bangladesh Export Processing Zones Authority, National Board of Revenue and other authorities. The incentives are summarized as follows:-
Major Fiscal Incentives Major Non-Fiscal Incentives
Tax holiday Remittance of royalty, technical know-how, technical assistance fee
Accelerated depreciation allowance instead of tax holiday
100% foreign equity allowed
Concessionary income tax in lieu of Tax holiday and Accelerated depreciation allowance
Unrealistic exit policy
Concession duty on imported machinery Full repairation facilities of dividend and capital at the event of exit
Avoidance of double taxation Permanent Residence Permit on investing US $75000 and Citizenship Offer for investing US $500,000
A brief overview of the above incentive scheme is given below
Tax holiday and Concession:
1. For existing industries: Tax holiday facilities are available in the existing industry for 4 or 6 years depending on the location of the industrial enterprise
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Location YearsDhaka and Chittagong Divisions (excluding 3 Hill tract districts of Chittagong division)
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Khulna, Sylhet, Barisal and Rajshahi Divisions and 3 Chittagong hill tract districts
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List of Tax holiday applicable sectors:
1. Textile 9.Pharmacuticals2. Melamine 10. Plastic 3. Ceramic and sanitary 11. Steel Production from Iron ore4. Fertilizer production 12. Insecticide and Pesticide5. Computer hardware production 13. Residential hotels of Three Star Standard 6. Petro- chemicals 14.Basic ingredients of Drug, Chemical 7. Agro machineries 15. Ship building 8. Physical infrastructure 16. Textiles
a. Agro Machineriesb. Boiler and compressor c. LNG terminal /Internal container depot/Container freight stationd. CNG terminal and Transmission Linee. Gas pipe linef. Flyoverg. Large scale water treatment plant and its supply through pipe lineh. Waste processing plant i. Export processing zone
2.1 Growth Performance in FY2009-10 Real GDP growth is estimated to be lower (at 5.54 per cent for FY2009-10) than the target, driven by sluggish investment, severe power crunch and lower export growth. If this actually turns out to be the case, it will be for the fourth consecutive year that growth rate has come down year-on-year. It is thus to be noted that this lower growth would be attained over a lower-than-provisionally estimated GDP for FY2008-09. Whilst, from expenditure side, growth in consumption and public development expenditures contributed to the GDP growth in FY2009-10, decelerated growth rates of both agriculture and industry held the growth back from sectoral perspective.
The below par performance of the economy reflects lackluster performance by the manufacturing sector which is projected to post a modest growth of 5.28 per cent in FY2009-10 against 6.68 per cent growth in FY2008-09 and was significantly lower than the performance recorded in the recent past. Industry sector as a whole could manage only a 6.04 per cent growth in FY2009-10 compared to the 6.46 per cent growth attained in FY2008-09. Agriculture sector’s performance is also expected to be lower than the target, recording 2.20 per cent growth. While high base-year growth was an important factor, impact of price disincentive in FY2008-09, a drought during the Aus season and flash flood also contributed to the lower growth performance. The 6.59 per cent growth projected for the service sector was in line with trend growth rates of recent times (6.3 per cent in FY2008-09). Fall in global commodity prices and lower import demand resulted in only a 1.37 per cent growth for import duty in FY2009-10. Over the last four years, GDP growth performance has been consistently lower than the targets set in respective budgets. As a result, the GDP in FY2009-10 was lower by 2.23 per cent than it would have been had the targets in last four years been achieved.
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FIGURE 1: TARGETED AND ATTAINED GDP GROWTH RATES
2.2 Macroeconomic stabilityOverall macroeconomic stability was maintained in the backdrop of higher NBR-generated income and lower fiscal deficit on account of lower subsidy payment and under spent ADP.
During the first ten months, NBR was able to collect about 77 per cent of the revenue target with a growth rate of 17.16 per cent that comfortably crossed the targeted growth of 16.13 per cent for the full fiscal year. In the event only a 12.85 per cent growth will be required over the last two months to attain the target set out for the NBR (Table 1).
Although Customs Duty (CD) collection will still require a big jump to achieve the target set out for this particular sub-component, it was partially compensated by higher revenue collection efforts from Value Added Tax (VAT) and Supplementary Duty (SD) at the import stage.
However, overall indirect tax collection at the import stage was off the track with only 8.79 per cent growth during the first ten months against an annual target of 11.34 per cent. Income tax collection was impressive, along the demonstrated trends of the recent past. Here the growth was 20.83 per cent although revenue earnings performance under the ambit of the legalization of undisclosed income scheme was dismal by any account. Indirect tax collection, particularly the VAT component at local stage achieved higher growth than that was targeted (25.60 per cent and 26.72 per cent respectively)
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PRICE AND INFLATION SCENARIO
Inflationary trends in Bangladesh have tended to follow global trends, with pressure building up in recent times. Global commodity prices have experienced unprecedented volatility since 2004-05 due to loss of production of major crops in some of the important food producing countries and diversion of food grains for ethanol in a number of developed countries including the USA and the EU.
Though inflation rate in Bangladesh was lower when compared to that of other South Asian counties, except for Sri Lanka (Figure 3), price levels, particularly for food items, have been on the rise in the recent past. Point to point inflation rose from 2.25 per cent in June 2009 to 8.78 per cent in March 2010 (Figure 4) and was driven mainly by the rise in food inflation. However, non-food inflation decreased during this period both in rural and urban areas. Twelve month average national inflation, however, decreased from 6.66 per cent in June 2009 to 6.26 per cent in March 2010 thanks mainly to lower levels during the earlier months of FY2009-10 when global commodity prices were lower and in the domestic front the agriculture sector posted commendable performance.
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Interpreting the nature of forces driving inflation In view of price hikes the government has continued to take up a number of fiscal and monetary measures. While these measures may result in some positive changes in the short run, keeping price stability over the medium term would necessitate identification of the driving forces of inflation and interpreting their nature
a. Growth in money supply Inflation and money supply have started to rise in tandem since November 2009; however, contractionary monitory policy may not be the answer. A look at the short term movement of inflation and monetary growth indicates that since November, 2009 both inflation and State of the Bangladesh Economy in FY2009-10
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Money supply has started to rise. At the end of March, 2010 broad money (M2) grew by 21.29 per cent as opposed to a growth rate of 19.30 per cent at the end of March, 2009 and against the target of 15.50 per cent at the end of June, 2010 set by the Bangladesh Bank. The growth of reserve money (RM) at the end of March, 2010 was 17.86 per cent, a moderate decline from the 22.93 per cent experienced in March, 2009 but much higher than the target of 7.0 per cent by June, 2010
b. Exchange rate policy:Exchange rate management policy pursued by the central bank helped maintaining taka-dollar rates stable. Exchange rate is a key macroeconomic variable because of its implications for inflation, export sector performance and competitiveness, import and overall state of economic activities. Several countries have used exchange rate as a tool for inflation targeting through appreciation of their currencies. Exchange rate depreciation directly affects prices of tradable goods in domestic currency units and indirectly affects the general price level if pricing decisions are influenced by the cost of imported inputs. Depreciation of Bangladeshi Taka (BDT), particularly against currencies which could have an influence on the domestic prices, such as the Indian Rupee (INR), may have contributed to higher food inflation in Bangladesh in the recent past
It has been Bangladesh Bank’s practice to resort to sterilization, on a regular basis, to maintain stability in the country’s exchange rate market and protect the interests of exporters and remitters. It is to be noted that the corresponding exchange rate as per Real Effective State of the Bangladesh Economy in FY2009-10: Second Reading 11
Exchange Rate (REER) has been lower compared to Nominal Effective Exchange Rate (NEER) during FY2009-10 indicating a depreciated BDT against USD. In the event this policy may have contributed to a larger foreign exchange reserves. In order to understand the linkages between
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inflation and exchange rate in the Bangladesh context, there is a need to examine the long-term trend which reveals that BDT has depreciated over time against the United States Dollar (USD) compared to other South Asian countries (Figure 6)
c. Output gap and international prices
Movement of prices in the domestic market has tended to follow price behavior in the global commodity market. Bangladesh is now able to largely meet its demand for rice through domestic production (Figure 7). The narrow gap between production and demand for rice is met through imports mainly from Thailand and India. During periods of lower global production of rice, Bangladesh needs to import rice at a high price which may lead to inflationary pressure with negative impact on purchasing power of people with limited income. For many other major items such as wheat, pulses, sugar, soybean oil, onion and milk, Bangladesh has to rely more on importation. Consequently, price volatility of these items in the international market affects prices in Bangladesh to a significant extent. In FY2009-10 variability in prices in the domestic market decreased for rice, flour, soybean oil, milk powder and sugar, but increased for lentil, eggs, potato, onion and egg plant. It is to be noted in this connection that between the July, 2009 and April, 2010 prices of rice, soybean oil, sugar, and crude oil have shown fluctuating but rising trend in the international market
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PUBLIC AND PRIVATE INVESTMENT:Overall Investment Bangladesh has witnessed sluggish public sector investment which had adverse implications for investment by the private sector. Declining investment efficiency also emerged as a concern. Low level of investment has been a major barrier to stimulating economic growth in Bangladesh in recent years. Although nominal growth in FY2009-10 for public and private investment were 10.3 per cent and 12.7 per cent respectively, investment has stalled at around 24 per cent of GDP since FY2003-04 (Figure 9). More importantly, a continuing fall of public investment as a share of GDP (from 6.2 per cent in FY2004-05 to 4.6 per cent in FY2009-10) is emerging as a serious concern in the context of the need to generate the desired crowd-in effect on private investment and to attain higher levels of investment efficiency
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Public Investment: Annual Development Programme (ADP): In the context of ‘low level’ public investment scenario, the weak ADP performance has undermined the catalytic role that public sector is expected to play in terms of stimulating domestic private sector investment. In Bangladesh public investment (Tk. 31,875.2 crore during FY2009-10) is largely driven by government’s Annual Development Programme (ADP) (89.4 per cent of public investment in FY2009-10). While the ADP for FY2009-10 was set at Tk. 30,500 crore, the RADP for FY2009-10 was slashed by an amount of Tk. 2,000 crore and was set at Tk. 28,500 crore.
However, allocation for top ten ministries (according to implementation performance during the first part of the fiscal year) saw an upward revision by an amount of Tk. 671 crore in the RADP (Tk. 23,837.8 crore) (Figure 10). Thus, a number of ministries such as Water Resources (39.5 per cent growth in allocation in RADP), Education (50.4 per cent), Energy and Mineral Resources (50.7 per cent) and LGD (6.2 per cent) saw increased availability of resources in the RADP. Mainly project-funded activities were revised downward (-12 per cent).
Investment under Public-Private Partnership (PPP)The much hyped PPP component of the FY2009-10 budget has remained unutilized inspite of some progress being made in terms of putting in place the regulatory framework. With an investment target of Tk. 70 billion, government had allocated an amount of Tk. 25 billion earmarked separately under the PPP budget. Rather, Tk. 5 billion was slashed from the PPP budget in the revised ADP for FY2009-10. It is anticipated that Tk. 30 billion will be allocated in the upcoming budget for FY2010-11 under the PPP head; the public-private investment leverage ratio is estimated to be close to 1:2.7. Also, 23 projects under PPP relating to power, infrastructure and healthcare sectors have been included in the FY2010-11 ADP project list though no fund has been allocated for these projects.
Private InvestmentPrivate investment remained subdued because of weak public sector response with regard to investment in power and infrastructure. Private investment has maintained a double-digit growth in nominal terms over last two decades (e.g. on an average 13.1 per cent in FY2001-05 and 14.3 per cent in FY2005-2006). Private investment’s share in GDP is about 19 per cent, accounting for about 80 per cent of total investment in the country. Low levels of private investment (Tk. 13,6284.6 crore
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or 19.7 per cent of GDP in FY2009-10) was mainly due to absence of conducive investment environment rather than availability of funds (considering the prevailing high level of excess liquidity with the scheduled banks), although investors have complained about high interest rates and high spread between lending and deposit rates.
Composition of private investment in the form of outstanding credit balance appears to have remained unchanged over the past several years. As of December, 2009 shares of outstanding credit balance for various sectors were as follows: 35.5 per cent in manufacturing activities, 6.15 per cent in agriculture, 1.94 per cent in services, 6.85 per cent in construction and 36.8 per cent in trading (including export and import financing).
Investment in Agriculture Sector: Disbursement of Agricultural CreditIn view of development of diversified agriculture, particularly in non-rice and non-crop sectors, large scale private investment is needed along with public investment, if required on PPP basis.
Investment in agriculture, in terms of share of outstanding credit balance, in December, 2009, was only about 6.2 per cent (Tk. 14,369.1 crore). This small share of institutional credit does not reflect the substantial investment in agriculture since a large part of investment in the sector originates from other sources.
In terms of outstanding loans, major share of investment in agriculture sector was mainly for crop cultivation (67 per cent of outstanding loans to agricultural activities as of December, 2009) (Figure 12a). Credit disbursed by microfinance institutions (MFIs) was another source of capital for investment in agriculture sector. As of December, 2008 their disbursement of agricultural credit was Tk. 1,42,725.7 million, which was 31.6 per cent higher compared to that of commercial banks (Figure 12b). In view of its high income elasticity, and the expected rise in demand, investment in non-crop agricultural activities needs to be increased further through channeling of more financial resources of commercial banks and MFIs into the related areas.
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Investment in the Manufacturing Sector: Disbursement of Credit
Manufacturing sector experienced a declining trend in production in the current year (coming down from 10.8 per cent in FY2005-06 to 5.28 per cent in FY2009-10).
Production in the manufacturing sector was affected mainly due to lack of adequate supply of electricity and gas. Other contributing factors were volatility in the market for raw materials particularly of cotton yarn and raw jute, depreciation of Euro, and low demand of some of the export items.
However, several export-oriented industries have posted higher growth including leather and leather products, jute goods, and ceramic product among others
It is of interest to note that disbursement of industrial term loan recorded significant improvement thanks to increased demand for credit by major industries. During July-March, FY2009-10 disbursement of term loan was Tk. 18,827.5 crore registering a growth 42.9 per cent compared to that in the previous year (Tk. 13,174.2 crore; growth (-) 9.6 per cent)
.
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Foreign Investment: FDI and Portfolio Investment Aggregate FDI inflow was dismally low; however, higher FDI flow to EPZs has reinforced the need to address power and infrastructure issues on an urgent basis. FDI inflow (gross) in July-March FY2009-10 (USD 447 million) has declined by 50.9 per cent compared to the corresponding period of the previous year.
Because of various constraints, including shortages of electricity and gas, FDI in the domestic tariff area (DTA) has declined by 61.7 per cent during this period
On the other hand, FDI flow to export processing zones (EPZs) was able to demonstrate high growth, (24.9 per cent in July-March, FY2009-10) most likely because of assured power and utility facilities and better infrastructure.44FDI in the power sector has also fallen significantly in recent years, as shown in.
The ‘road shows’ organized in New York and Singapore to attract FDI in the energy sector is yet to generate results in terms of concrete investment proposals.
Portfolio investment flow was negative during July-March FY2009-10 ((-) USD 42 million), continuing the trend of FY2008-09 in the backdrop of the global financial crisis. In contrast to the high growth of registration of local companies (3,293 units; with a growth of 63 per cent during July-April, FY2009-10) registration of FDI, similar to the FDI flow, has experienced negative growth (797 units and (-) 62.0 per cent growth).
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Investment in the Capital MarketIn the backdrop of slow growth of industrial production over the last few years, particularly during the first half of FY2009-10, significant growth of capital market attracted attention of industrial analysts. Between May, 2009 and May, 2010, DSI index registered a growth of 134.4 per cent (index value was 5,030.05 at the end of May, 2010), DSE20 index gained 70.5 per cent (index value was 3,432.23 the end of May, 2010); market capitalization rose by 133.6 per cent (amounting to USD 36.88 billion at the end of May, 2010 which was equivalent to about 40 per cent of the GDP) (Figure 16).
These developments in the market are particularly attributed to a number of issues: firstly, highest number of initial public offerings (IPOs) were floated during the ongoing fiscal year (21 new IPOs) which included a large MNC the Grameen Phone (GP), which contributed to the depth of the capital market.47 Secondly, the bullish market attracted a huge number of small investors (in April, 2010 total number of BO account holders reached about 2.5 million
Number of new BO accounts that were opened in the DSE between April, 2009 and April, 2010 was 0.32 million (corresponding figures for the same period of previous two years were: 0.34 and 0.31 million, respectively). Most of these investors were small investors with limited knowledge about the market.Some analysts have argued that the market is becoming overheated and investment in the market is becoming increasingly risky (Box 4). The sharp rise of price earnings (P/E) ratio (P/E ratio for DSE was 29.9, whereas for some companies it was as high as 75 and above) has reinforced this argument
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Chapter-2: Industry Analysis \
2.1 Introduction:
Industry analysis is a tool that facilitates a company's understanding of its position relative to
other companies that produce similar products or services. Understanding the forces at work in
the overall industry is an important component of effective strategic planning. Industry analysis
enables small business owners to identify the threats and opportunities facing their businesses,
and to focus their resources on developing unique capabilities that could lead to a competitive
advantage
A comprehensive industry analysis requires a owner to take an objective view of the underlying
forces, attractiveness, and success factors that determine the structure of the industry.
Understanding the company's operating environment in this way can help the business owner to
formulate an effective strategy, position the company for success, and make the most efficient
use of the limited resources of the small business
2.2 Major Industries of Bangladesh
Bank Industry (30):
AB Bank, City Bank, IFIC Bank, Islami Bank, National bank, Pubali Bank, Rupali Bank, Uttara
Bank, ICBI Bank, Eastern Bank, Al-Arafa Bank, Prime Bank, Southeast bank, Dhaka Bank,
NCC Bank, Social Islami Bank, Dutch Bangla Bank, Mutual Trust Bank, Standard Bank, One
Bank, Bank Asia, Mercantile Bank, Exim Bank, Jamuna Bnak, Brac Bank, Sahajalal Bank,
Premier Bank, Trust Bank, First Security Bank,
Non- Banking Financial Institutions (21):
IDLC Finance Ltd, United Leasing, Uttara Finance, Midas Finance, First Leasing, Peoples
Leasing, Prime Finance, Premier Leasing, Islamic finance, Lanka Bangla Finance Ltd, BIFC,
IPDC, Union Capital, BD Finance, Inter. Leasing, Phoenix Finance, Fidelity Asset, Delta Brac,
National Housing Finance, Bay Leasing.
Mutual Fund (32):
ICB, 1st ICB MF, 2nd ICB MF, 3rd ICB MF, 4th ICB MF, 5th ICB MF, 6th ICB MF, 7Th ICB MF, 8th
ICB MF, 1st BSRS, IAMCLS 1st MF, Grameen 1 MF, Grameen 2 MF, ICBE MF etc.
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Food and Allied (15):
Alpha Tobacco, Apex Foods, Bangas, BLTC, BATC, National Tea, Zheal Bangla, Chittagong
Vegetable, AMCL Pran, Dhaka Fisheries, Shyampur Sugar Mills Ltd, Rahima Food, Gulf
Foods, Fu-Wang food, Meghna Pet, Meghna Condensed Milk, Beach Hatchery, Fine Foods.
Engineering (23):
Aftab Auto, Aziz Pipes, Olympic Industries Ltd, Bangladesh Lamps, Eastern Cables, Singer BD,
Atlas Bangladesh, BD Auto, Quasem Dry cells, Renwick Jajneswar & co, National Tubes, BD
Thai Aluminum, Anwar Galvanizing, K & Q, Rangpu Foundry, S.Alam Steel, Golden Son,
BSRM Steel, Navana CNG, National Polymer etc.
Fuel & Power (11):
BOC BD, Padma Oil, Eastern Lubricants, Bangladesh Welding, Summit Power, Desco, Power
Greed, Meghna Petroleum, Titas Gas etc.
Jute (3):
Jute Spinners, Sonali Aansh etc.
Textiles (25):
Al-Hajj Textile, Stylecraft, Rahim Textile, Quasem Textile, Saiham Textile, Modern Dying,
Desh Garments etc
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2.3 Sectoral P/E Ratio:
2010 2009 20080
10
20
30
40
50
60
70
P/E Ratio
BankFinancial InstitutionsFuel & PowerEngineering TextilePharmaceuticalsInsuranceFood & AlliedMutual FundService & Real EstateMiscellaneous
Price to Earning (P/E) ratio = price (per share) ÷ earnings (per share). P/E ratio reflects the price currently being paid by the market for each Taka of currently reported EPS. In other words, the P/E ratio measures investors’ expectations and the market appraisal of the performance of a firm.
The P/E tells you what the market is willing to pay for the company’s earnings. If a stock has a
P/E of 15, that means the market is willing to pay 15 times its earnings for the stock. For this reason, P/E is sometimes referred to as a multiple. In the above example, the stock has a multiple of 15. Companies with good growth potential will have a higher P/E because investors are willing to pay a premium for future profits. High-risk companies will typically have low P/Es, which means the market is not willing to pay a high price for risk.From the above graph, we see that P/E ratio of Financial institutions, Fuel & Power, Engineering, Textile, Pharmaceuticals has increased in 2010 that is indicating that business prospects of these sectors is increasing. On the other hand P/E ratio of the Bank, Fuel & Power, Mutual funds and other has decreased that is indicating the lack of confidence of the investors on these sectors in this year. But P/E ratio always does not predict the actual scenario of the market. Sometimes some shares are overvalued because of different rumor and through different fraudulent activities of the related parties. In that case P/E ratio does not give meaningful picture of the respective industries.
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2.4 Market Capitalization:
Bank32%
Financial institu-tions13%Insurance
6%Mutual Fund
1%Foods
2%
Pharmaceuticals7%
Textile4%
Engineering4%
Cement3%
Fuel & Power10%
Tennery1%
Ceramics2%
Miscellaneous15%
Market Capitalization
Figure: Sectoral Market Capitalization- December 2010
Market capitalization or “Market cap” refers to the total market value of all the publicly traded shares of that company. Basically one takes the number of shares available for a company, multiply by the stock price and that gives you the market capitalization.It gives one a starting place for evaluation. When looking a stock, it should always be in a context. From the above graph, we see that Banking sector holds about 32%, that is largest share of all the sectors, Financial institutions hold 13%, Power and Fuel 10% and other holds the remaining portion of the total market capitalization.
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2.5 Sectoral Turnover in 2010:
41%
11%9%4%2%
3%
8%
5%
3%
0%
2%7%
7%
Turnover
BanksFinancial InstitutionsInsuranceMutual FundFoodPharmaTextileEngineeringCeramicsTenneryCementFuel & powerMiscellaneous
From the above graph, it is visible that of the total turnover Banking sectors gain 41%, Financial institutions 11%, Insurance 9%, Textile 7% and other sectors gain the remaining portion of the total Turnover of the market. Here we see that financial sectors are making more turnover than other other sectors. Investors will me more interested to invest in the financial sectors as the possibility of positive return is higher here. Pharmaceuticals, Textile and Fuel and power sectors are also making substantial return from their investments. But it will not be a wise decision for investors to invest in a sector only looking at its return only. They have to analyze the risk of their investment in the particular sector. They should make a risk- return trade off to take investment decision.
2.6 Conclusion:After analyzing the performance and financial strength of all the sectors, we see that turnover of the Banking sector is higher than other sectors. Also market capitalization of this sector is higher than other sectors. Other than Banking sectors, Financial institutions, Insurance, Textile sector are contributing a substantial portion of total return. Banking, Financial institutions, Fuel & Power, Pharmaceuticals are holding the major portion of the total market Capital. In comparison with the performance and the financial strength of these sectors their sectoral P/E ratio is lower. This indicates that the price of the shares of these companies is undervalued. So investors can invest in the shares of these companies with minimum risk and maximum possibility of return.
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Chapter-3: Company Analysis:3.1 Introduction:While investing in stock market, analyzing the companies under different industries is very important. This help the investors to make a well informed decisions about their investment. While analyzing the companies, investors have to analyze the performance and financial stability of the companies. To analyze the performance of the companies we can look at the EPS, ROE, ROA and P/E ratio of the companies and to analyze the financial strength we can look at the company’s NAV. Companies with good EPS are good performing but only on the basis of EPS, Investors should not take their investment decision. They have to look at the companies’ financial strength3.2 Engineering: Companies EPS NAV P/E
2009 2008 2007 2009 2008 2007 2009 2008 2007
Aftab Auto 3.19 30.95 8.06 39.04 N/B 35.22 69.72 15.82 20.26
Atlas BD 22.39 9.69 12.63 55.93 43.62 57.40 28.45 37.70 24.42
Aziz pipe 6.20 -98.52 - -375.16 -365.88 -254.39 78.06 N/A -
Goldenson 2.61 1.51 0.38 20.97 20.51 10.84 23.92 45.54 40.79
Singer BD 114.36 68.22 61.26 481.68 278.81 259.40 24.42 29.06 31.02
S Alam 21.85 22.86 13.42 116.69 109.85 103.98 48.83 16.80 9.37
BSRM 39.59 -153 N/A 8.62 -30.97 N/A 29.67 N/A N/A
Aftab Auto Atlas BD Aziz Pipes BSRM Steel Golden Son Singer BD S Alam Steel
EPS 3.19 22.39 6.2 39.59 2.61 114.36 31.85
NAV 39.04 55.93 -375.16 8.62 20.97 481.68 116.55
P/E 69.72 8.45 78.06 29.67 23.92 24.42 48.83
-500
-300
-100
100
300
500
EPS, NAV & P/E of Engineering Sectors in 2009
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If we observe the companies in the Engineering Sectors, we see that according to EPS BSRM Steel, Singer BD, S Alam Steel, Atlas BD are very good performing companies. All the above mentioned companies except BSRM have good asset base. P/E ration of the Aftab Auto, S Alam Steel is very good that indicates that these companies have good prospects in future. Though Aziz Pipes have very good P/E ratio, its EPS and NAV are not to the expected extent. So we can conclude that Copanies which have higher P/E ratio with strong assets base are very much suitable for investment. At the same time investors have to notice to the EPS companies earn to evaluate its performance.
3.3 Food & Allied:Companies EPS NAV P/E
2009 2008 2007 2009 2008 2007 2009 2008 2007
AMCL 49.96 44.94 36.66 449.96 428.39 383.91 27.32 25.33 10.92
Apex Food 15.66 41.51 37.60 695.82 731.49 707 - 29.22 15.13
BATBC 34.48 27.81 13.32 86.04 75.56 54.75 11.87 7.25 11.15
Fuwang Food 1.17 0.77 0.70 13.96 13.90 12.73 46.09 37.20 29.87
Bangas 17.02 22.50 21.74 168.06 164.80 162.78 98.11 21.59 10.46
AMCL APEX Food BATBC Fuwang Food Bangas
EPS 54.49 -15.66 34.48 1.17 17.02
NAV 475.1 695.82 86.04 13.9 164.8
P/E 27.32 0 11.87 37.2 98.11
-50
50
150
250
350
450
550
650
750
EPS, NAV & P/E of Food & Allied in 2009
Above graph shows that AMCL, BATBC and Bangs has good EPS that indicate that these companies are performing well. On the other hand APEX food has negative EPS this year that indicate that company has made loss this year but this company has good NAV that tells about its financial strength. Bangas has moderate level of EPS but its assets base is good also its P/E ratio is also good that indicate it has good potentials. Fuwang food does not have good EPS, NAV but its P/E ratio is somewhat high. Its share may be overvalued and may be risky to invest in its share
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3.4 Pharmaceuticals & Chemicals:
Companies EPS NAV P/E2009 2008 2007 2009 2008 2007 2009 2008 2007
ACI 30.64 57.69 21.04 151.62 154.85 105.55 14.59 10.84 9.39
Beximco Pharma
4.13 4.33 3.08 72.02 82.97 73.56 43.40 46.45 19.12
IBN SINA 54.70 48.09 31.19 239.34 209.64 187.75 34.05 20.70 25.23
Kohinoor Chem
76.69 63.45 35.48 -124.83 -161.53 -194.98 41.80 10.82 11.82
Square Pharma 170.51 N/A 218.61 905.05 N/A 1280.08 28.13 23.44 35.90
ACI Beximco Pharma IBN SINA Kohinoor Chemical Square Pharma
EPS 30.64 4.13 54.7 76.69 170.51
NAV 151.62 72.02 239.34 -124.83 905.05
P/E 14.59 43.4 34.05 10.82 23.44
-100
100
300
500
700
900
EPS, NAV & P/E of Pharma & Chemicals in 2009
Above graph shows that Square Pharmaceuticals, Kohinoor Chemicals, IBN SINA have good EPS. ACI has moderate level of EPS but EPS of Beximco Pharma is very poor in 2009. Assets base of the Square pharma, ACI, IBN SINA is very strong but the assets base of the Kohinoor Chemicals is negative. It indicates that total liability of the company surpasses its total assets value. So it is riskier for the investor to invest in its share. In comparison with the NAV of the Square pharma, IBN SINA and ACI their P/E ratio is lower. This indicates that the price of these companies share is undervalued. So investors can invest in the shares of these companies to gain a handsome return in the future.
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3.5 Textile:
Companies EPS NAV P/E2009 2008 2007 2009 2008 2007 2009 2008 2007
All Tex -12.20 1.26 2.24 118.51 131.97 131.20 N/A 66.27 28.46
Bex Tex 4.16 -3.23 -5.28 26.22 17.81 10.25 22.49 N/A -
Metrospin 3.74 3.05 1.16 79.56 N/A 15.31 94.80 12.47 8.88
Prime Tex 10.59 18.61 13.97 632.86 300.32 291.67 21.86 7.75 4.42
Sqare Tex 5 6.89 8.94 47.41 852.69 53.23 25.61 23.85 14.25
Al Haj Tex -1.71 1.30 2.76 14.27 19.16 N/A N/A 46.15 -
HR Tex 12.54 11.34 9.65 125.85 124.51 122.93 24.14 9.54 6.99
Alltex Indus-tries
Bextex Metrospin Primetex Squaretex Al Haj Tex HR Textile
EPS -12.2 4.16 3.77 10.59 5 -1.71 12.54
NAV 2.4 4.4 79.56 614.72 47.41 19.16 125.85
P/E 0 22.49 94.8 21.86 25.61 46.15 24.14
-50
50
150
250
350
450
550
650
EPS, NAV & P/E of Textile in 2009
From the above data we see that EPS of the HR Textile, Prime Tex is somewhat good and their assets base is also good. So in Textile industry they are somewhat profitable and secured. EPS both Altex Industries, Al Haj Tex is negative and their assets base is very poor. It is very risky and not so profitable to invest in the share of those companies.
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3.6 Insurance:
Companies EPS NAV P/E2009 2008 2007 2009 2008 2007 2009 2008 2007
Agrini Insur. 12.10 11.90 11.40 124.88 122.22 110.31 42.78 27.92 10.90
Eastland Ins 46.74 42.76 67.22 263.06 284.96 335.72 28.94 30.85 6.03
Rupali Ins 33.50 28.07 26.26 471.51 282.738 317.76 44.44 25.49 14.08
Global Ins 12.04 10.27 13.85 137 128.16 124.89 45.89 20.80 9.17
Janata Ins 12.46 10.61 10.51 136.58 136.15 N/A 82.32 39.52 17
Sonarbangla 14.07 11.64 1.71 124.99 119.25 107.61 31.90 14.13 63.30
Agrani Insurance Eastland Insur-ance
Rupali Insurance Global Insurance Janata Insurance Sonarbangla In-surance
EPS 12.1 46.74 33.5 12.04 12.46 14.07
NAV 124.88 263.06 471.51 119.56 136.58 124.99
R/E 42.78 28.94 44.44 45.89 82.32 31.9
2575
125175225275325375425475
EPS, NAV & P/E of Insurance in 2009
In the insurance sector, EPS of the Eastland insurance, Rupali insurance is good over the year. Their assets base is also good. In comparison with their EPS and NAV their R/E is not so high. So it is very safe and profitable to invest in the shares of these companies. Global insurance, Janata insurance and Sonarbangla insurance have moderate EPS and have moderate NAV. So it is not so profitable and so safe to invest in the share of these companies.
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3.7 Fuel & Power:
Companies EPS NAV P/E2009 2008 2007 2009 2008 2007 2009 2008 2007
BOC 40.08 23.61 17.32 120.85 99.28 91.62 12.15 11.26 18.53
DESCO 120.42 78.73 55.94 548.46 N/A 273.06 14.03 11.92 17.06
Jamuna Oil 9.32 11.36 N/A 34.23 32.9 N/A 21.63 17.50 -
Megna Pet. 8.66 9.53 N/A 27.86 25.52 N/A 30.32 22.38 N/A
SummitPower 3.14 25.71 30.90 19.57 197.19 184.58 48.04 46.69 46.65
Titas Gas 63.67 49.25 N/A 194.27 159.88 N/A 10.57 N/A N/A
Powergrid 42.39 46.46 34.4 390.01 351.55 270.21 13.13 11.98 16.99
BOC DESCO Jamuna Oil Megna Petrolium
Summit Power
Titas Gas Powegrid
EPS 40.08 120.42 9.32 8.66 3.14 63.67 42.39
NAV 120.85 548.46 34.23 27.86 19.57 194.27 390.01
P/E 12.15 14.03 21.63 30.32 48.04 10.57 13.13
50
150
250
350
450
550
EPS, NAV & P/E of Fuel & Power in 2009
Desco, Titas Gas, Powergrid, BOC are making good EPS over the years and their assets base is also very strong at the same time their P/E ratio is very low in comparison with their performance and financial position. So it will be very wise decision to invest in the shares of these companies. Jamuna oil, Megna Petroleum and Summit Power are not earning enough EPS and their assts base is not strong enough. At the same time their P/E ratio is higher in comparison with their performance. So it will not be a wise decision to invest in the shares of these companies if investors want to make a safe and profitable investment.
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3.8 Bank:
Companies EPS NAV P/E2009 2008 2007 2009 2008 2007 2009 2008 2007
AB Bank 133.26 103.18 256.10 399 301.49 807 11.04 9.16 10
Bank Asia 61.88 39.38 47.30 230.98 191.44 184.76 9.65 11.97 11.03
SoutheastBan 56.64 31.11 53.60 331.01 257.95 294.28 8.24 8.77 10.69
Brac Bank 64.37 61.463 55.95 404.59 343.28 256.55 13.88 17.52 29.33
Dutch Bangla 75.85 82.17 237.37 290.12 3222.05 1154.88
34.42 52.46 28.50
IFIC 51.58 49 143.87 240.70 238.31 389.70 22.30 31.54 16.13
NCC Bank 7.53 50.20 50.09 26.40 230.73 218.83 15.26 9.47 8.81
SIBL 1.84 1.72 17.60 13.20 14.26 165.75 16.74 12.49 28.79
Uttra Bank 6.92 142.55 102.56 38.86 416.88 614.42 31.44 47.61 47.34
AB Bank Bank Asia
South East Bank
Brac Bank
Duth-Bangla Bank
IFIC NCC Bank
SIBL Uttara Bank
EPS 133.26 61.68 54.64 64.37 75.85 51.58 7.53 1.84 6.92
NAV 399 230 331.01 404.59 290.12 240.7 26.4 13.2 38.86
P/E 11.04 9.65 8.24 13.88 34.42 22.3 15.26 16.74 31.44
2575
125175225275325375425
EPS, NAV & P/E of Bank in 2009
EPS of AB Bank, Bank Asia, Southeast Bank, Dutch Bangla Bank and IFIC Bank is very attractive. At the same time their Assets base is also very strong to support them. In comparison with their performance their P/E ratio is lower that indicate that shares of these companies are undervalued. So it will be very safe and profitable to invest in the shares of these companies. EPS and NAV of SIBL, Uttara Bank is not so good. So it is not so much profitable and safe to invest in the shares of these companies.
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Conclusion:After analyzing performance of all the companies, we see that some companies have good EPS and good assets base but these companies P/E ratio is lower. This indicates that the shares of these companies are undervalued. If the investors invest in these shares, there are higher potentials of getting good return with minimum risk. Again some companies don’t have good EPS and NAV, but their P/E ratio is very high. This indicates that these shares are overpriced. It is great risk for the investors to invest in the shares of these companies because when the market will get corrected, investors will lose their capital.
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Chapter-4: Personal portfolio
1st February
Company Buy Sale
No of
Share
Total
Buy
Total
Sale
Market
Value Gain
% of
Gain Balance
AB Bank 1318 30 39540 1318 0 0 460460
Bay Leasing 2650 50 132500 2650 0 0 327960
Apex Spin 1680 100 168000 1680 0 0 159960
2nd February
Company Buy Sale
No of
Share
Total
Buy
Total
Sale
Market
Value Gain
% of
Gain Balance
AB Bank 1318 30 39540 1330 360 0.91047 159960
Bay Leasing 2650 50 132500 2600 -2500 -1.88679 159960
Apex Spin 1680 100 168000 1640 -4000 -2.38095 159960
3rd February
Company Buy Sale
No of
Share
Total
Buy
Total
Sale
Market
Value Gain
% of
Gain Balance
AB Bank 1318 30 39540 1300 -540 -1.36571 159960
Bay Leasing 2650 50 132500 2500 -7500 -5.66038 159960
Apex Spin 1680 100 168000 1725 4500 2.678571 159960
36 | P a g e
6th February
Company Buy Sale
No of
Share
Total
Buy
Total
Sale
Market
Value Gain
% of
Gain Balance
AB Bank 1318 30 39540 1300 -540 -1.36571 159960
Bay Leasing 2650 50 132500 2370 -14000 -10.566 159960
Apex Spin 1680 1750 100 168000 175000 1725 7000 4.166667 334960
7th February
Company Buy Sale
No of
Share
Total
Buy
Total
Sale
Market
Value Gain
% of
Gain Balance
AB Bank 1318 1190 30 39540 35700 1170 -3840 -0.09712 370660
Bay Leasing 2650 50 132500 2250 -20000 -0.15094 370660
8th February
Company Buy Sale
No of
Share
Total
Buy
Total
Sale
Market
Value Gain
% of
Gain Balance
Bay Leasing 2650 50 132500 2250 -20000 -0.15094 370660
Apex
Spinning 1680 100 168000 1650 -3000 -1.78571 370660
9th February
Company Buy Sale
No of
Share
Total
Buy
Total
Sale
Market
Value Gain
% of
Gain Balance
Bay Leasing 2650 2450 50 132500 122500 2375 -10000 -7.54717 493160
Apex
Spinning 1680 100 168000 1650 -3000 -1.78571 493160
SE Bank 465 200 93000 463 -400 -0.43011 400160
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10th February
Company Buy Sale
No of
Share
Total
Buy
Total
Sale
Market
Value Gain
% of
Gain Balance
Apex
Spinning 1680 100 168000 1700 2000 1.190476 400160
SE Bank 465 200 93000 458 -1400 -1.50538 400160
13th February
Company Buy Sale
No of
Share
Total
Buy
Total
Sale
Market
Value Gain
% of
Gain Balance
Apex
Spinning 1680 1760 100 168000 176000 1720 8000 4.761905 576160
SE Bank 465 200 93000 415 -10000 -10.7527 576160
Beximco
Ltd. 240 1200 288000 250 12000 4.166667 288160
14h February
Company Buy Sale
No of
Share
Total
Buy
Total
Sale
Market
Value Gain
% of
Gain Balance
SE Bank 465 200 93000 380 -17000 -18.2796 288160
Beximco
Ltd. 240 1200 288000 229 -13200 -4.58333 288160
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15th February
Company Buy Sale
No of
Share
Total
Buy
Total
Sale
Market
Value Gain
% of
Gain Balance
SE Bank 465 200 93000 410 -11000 -11.828 288160
Beximco
Ltd. 240 200 48000 262 4400 9.166667 288160
Bextex 52 500 26000 53 500 1.923077 262160
20th February
Company Buy Sale
No of
Share
Total
Buy
Total
Sale
Market
Value Gain
% of
Gain Balance
SE Bank 465 200 93000 442 -4600 -4.94624 189060
Beximco
Ltd. 240 275 200 48000 55000 268 7000 14.58333 244060
Bextex 52 1000 52000 55 3000 5.769231 244060
22nd February
Company Buy Sale
No of
Share
Total
Buy
Total
Sale
Market
Value Gain
% of
Gain Balance
SE Bank 465 420 200 93000 84000 400 -9000 -9.67742 328060
Bextex 52 1000 52000 54.3 2300 4.423077 328060
23rd February
39 | P a g e
Company Buy Sale
No of
Share
Total
Buy
Total
Sale
Market
Value Gain
% of
Gain Balance
Bextex 52 1000 52000 55.5 3500 6.730769 328060
Stan Bank 410 450 184500 410 0 0 143560
24th February
Company Buy Sale
No of
Share
Total
Buy
Total
Sale
Market
Value Gain
% of
Gain Balance
Bextex 52 57 1000 52000 57000 55.8 5000 9.615385 200560
Stan Bank 410 250 102500 383 -6750 -6.58537 200560
27th February
Company Buy Sale
No of
Share
Total
Buy
Total
Sale
Market
Value Gain
% of
Gain Balance
Stan Bank 410 250 102500 362 -12000 -11.7073 133160
Aziz Pipe 425 300 127500 425 0 0 133160
28th February
Company Buy Sale
No of
Share
Total
Buy
Total
Sale
Market
Value Gain
% of
Gain Balance
Stan Bank 410 350 250 102500 87500 342 -15000 -14.6341 220660
Aziz Pipe 425 300 127500 410 -4500 -3.52941 220660
Meghna
Pet 15.2 10000 152000 15.2 0 0 68660
1st March
Company Buy Sale No of Total Total Market Gain % of Balance
40 | P a g e
Share Buy Sale Value Gain
Aziz Pipe 425 300 127500 405 -6000 -4.70588 68660
Meghna
Pet 15.2 10000 152000 15.8 6000 3.947368 68660
2nd March
Company Buy Sale
No of
Share
Total
Buy
Total
Sale
Market
Value Gain
% of
Gain Balance
Aziz Pipe 425 300 127500 425 0 0 68660
Meghna
Pet 15.2 17 10000 152000 170000 17 18000 11.84211 238660
Cont. Insu 410 400 164000 415 2000 1.219512 238660
3rd March
Company Buy Sale
No of
Share
Total
Buy
Total
Sale
Market
Value Gain
% of
Gain Balance
Aziz Pipe 425 300 127500 435 3000 2.352941 238660
Cont. Insu 410 400 164000 425 6000 3.658537 238660
Beach
Hatch 65 2000 130000 66 2000 1.538462 108660
6th March
Company Buy Sale No of Total Total Market Gain % of Balance
41 | P a g e
Share Buy Sale Value Gain
Aziz Pipe 425 300 127500 460 10500 8.235294 108660
Cont. Insu 410 400 164000 440 12000 7.317073 108660
Beach
Hatch 65 2000 130000 68 6000 4.615385 108660
7th March
Company Buy Sale
No of
Share
Total
Buy
Total
Sale
Market
Value Gain
% of
Gain Balance
Aziz Pipe 425 300 127500 450 7500 5.882353 108660
Cont. Insu 410 400 164000 430 8000 4.878049 108660
Beach
Hatch 65 2000 130000 67 4000 3.076923 108660
8th March
Company Buy Sale
No of
Share
Total
Buy
Total
Sale
Market
Value Gain
% of
Gain Balance
Aziz Pipe 425 473 300 127500 141900 470 14400 11.29412 250560
Cont. Insu 410 455 400 164000 182000 450 18000 10.97561 432560
Beach
Hatch 65 2000 130000 70 10000 7.692308 432560
9th March
Company Buy Sale
No of
Share
Total
Buy
Total
Sale
Market
Value Gain
% of
Gain Balance
Beach
Hatch 65 2000 130000 71 12000 9.230769 432560
CTGVEG 2100 100 210000 2100 0 0 222560
10th March
Company Buy Sale No of Total Total Market Gain % of Balance
42 | P a g e
Share Buy Sale Value Gain
Beach
Hatch 65 78 2000 130000 156000 77 24000 18.46154 378560
CTGVEG 2100 100 210000 2200 10000 4.761905 378560
13th March
Company Buy Sale
No of
Share
Total
Buy
Total
Sale
Market
Value Gain
% of
Gain Balance
CTGVEG 2100 100 210000 2300 20000 9.52381 378560
CMA Kamal 65 2500 162500 62 -7500 -4.61538 378560
14th March
Company Buy Sale
No of
Share
Total
Buy
Total
Sale
Market
Value Gain
% of
Gain Balance
CTGVEG 2100 100 210000 2400 30000 14.28571 378560
CMA Kamal 65 2500 162500 68 7500 4.615385 378560
15th March
Company Buy Sale
No of
Share
Total
Buy
Total
Sale
Market
Value Gain
% of
Gain Balance
CTGVEG 2100 100 210000 2500 40000 19.04762 378560
CMA Kamal 65 2500 162500 75 25000 15.38462 378560
Rahim Tex 1850 150 277500 1850 0 378560
16th March
Company Buy Sale No of Total Total Market Gain % of Balance
43 | P a g e
Share Buy Sale Value Gain
CTGVEG 2100 100 210000 2625 52500 25 378560
CMA Kamal 65 2500 162500 82 42500 26.15385 378560
Rahim Tex 1850 100 185000 1925 7500 4.054054 378560
20th March
Company Buy Sale
No of
Share
Total
Buy
Total
Sale
Market
Value Gain
% of
Gain Balance
CTGVEG 2100 100 210000 2700 60000 28.57143 378560
CMA Kamal 65 90 2500 162500 225000 90 62500 38.46154 603560
Rahim Tex 1850 100 185000 2000 15000 8.108108 603560
21st March
Company Buy Sale
No of
Share
Total
Buy
Total
Sale
Market
Value Gain
% of
Gain Balance
CTGVEG 2100 100 210000 2875 77500 36.90476 603560
Rahim Tex 1850 100 185000 2075 22500 12.16216 603560
Pharma AID 2350 200 470000 2375 5000 1.06383 133560
22nd March
Company Buy Sale
No of
Share
Total
Buy
Total
Sale
Market
Value Gain
% of
Gain Balance
CTGVEG 2100 100 210000 3020 92000 43.80952 133560
Rahim Tex 1850 2150 100 185000 215000 2150 30000 16.21622 348560
Pharma AID 2350 100 235000 2415 6500 2.765957 348560
23rd March
Company Buy Sale No of Total Total Market Gain % of Balance
44 | P a g e
Share Buy Sale Value Gain
CTGVEG 2100 100 210000 3250 115000 54.7619 348560
Pharma AID 2350 100 235000 2510 16000 6.808511 348560
24th March
Company Buy Sale
No of
Share
Total
Buy
Total
Sale
Market
Value Gain
% of
Gain Balance
CTGVEG 2100 100 210000 3380 128000 60.95238 348560
Pharma AID 2350 100 235000 2700 35000 14.89362 348560
27th March
Company Buy Sale
No of
Share
Total
Buy
Total
Sale
Market
Value Gain
% of
Gain Balance
CTGVEG 2100 3500 100 210000 350000 3500 140000 66.66667 698560
Pharma AID 2350 100 235000 2810 46000 19.57447 698560
ILFSL 1380 300 414000 1380 0 0 284560
28th March
Company Buy Sale
No of
Share
Total
Buy
Total
Sale
Market
Value Gain
% of
Gain Balance
Pharma AID 2350 3000 100 235000 300000 3000 65000 27.65957 584560
ILFSL 1380 300 414000 1400 6000 1.449275 584560
Tallu Spinn 648 600 388800 648 0 0 195760
29th March
Company Buy Sale No of Total Total Market Gain % of Balance
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Share Buy Sale Value Gain
ILFSL 1380 300 414000 1390 3000 0.724638 195760
Tallu Spinn 648 600 388800 685 22200 5.709877 195760
ULC 1330 100 133000 1330 0 0 62760
30-Mar
Company Buy Sale
No of
Share
Total
Buy
Total
Sale
Market
Value Gain
% of
Gain Balance
ILFSL 1380 1405 300 414000 421500 1405 7500 1.811594 484260
Tallu Spinn 648 600 388800 735 52200 13.42593 484260
ULC 1330 300 399000 1340 3000 0.75188 85260
31st March
Company Buy Sale
No of
Share
Total
Buy
Total
Sale
Market
Value Gain
% of
Gain Balance
Tallu Spinn 648 780 600 388800 468000 780 79200 20.37037 553260
ULC 1330 100 133000 1380 5000 3.759398 553260
Portfolio Performance Measurement
Working Day
Portfolio return(A)
Average portfolio
(A-B)^2 Market return©
Average market
(C-D)^2 (A-B)(C-D)
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return(B) return(D)
1 -1.80566992 5.162493 48.555294 -2.51 -0.37756 4.5473 14.859192 -1.04105399 5.162493 38.483995 -5.7 -0.37756 28.32837 33.01801
3 -2.21738619 5.162493 54.462617 -4.83 -0.37756 19.82422 32.85847
4 -0.13857243 5.162493 28.101295 6.7 -0.37756 50.09186 -37.5186
5 -1.06489185 5.162493 38.780322 -2.19 -0.37756 3.284939 11.28676
6 -3.10533672 5.162493 68.357008 -2.19 -0.37756 3.284939 14.98495
7 0.229885057 5.162493 24.330621 -7.27 -0.37756 47.50573 33.9977
8 1.821493625 5.162493 11.162277 -7.81 -0.37756 55.24116 24.83178
9 -7.92650919 5.162493 171.32198 6.22 -0.37756 43.5278 -86.3555
10 -3.65269461 5.162493 77.707533 7.82 -0.37756 67.19999 -72.263
11 2.797927461 5.162493 5.5911702 -3.38 -0.37756 9.014646 7.099466
12 -4.620689966 5.162493 95.710669 -2.51 -0.37756 4.5473 20.86205
13 1.479915433 5.162493 13.561378 -3.61 -0.37756 10.44867 11.90371
14 -1.13268608 5.162493 39.62928 -5.82 -0.37756 29.62015 34.26113
15 -5.2173913 5.162493 107.742 -4.76 -0.37756 19.20578 45.48922
16 -5.10471204 5.162493 105.4155 7.66 -0.37756 64.60237 -82.5233
17 -0.03312608 5.162493 26.994458 -5.52 -0.37756 26.44469 26.71816
18 4.509582864 5.162493 0.4262916 2.57 -0.37756 8.68811 -1.92449
19 2.609727165 5.162493 6.5166134 2 -0.37756 5.652792 -6.06935
20 6.761565836 5.162493 2.5570339 4.39 -0.37756 22.72963 7.623676
21 4.62633452 5.162493 0.2874659 4.69 -0.37756 25.68016 -2.71702
22 10.05931198 5.162493 23.978836 4.39 -0.37756 22.72963 23.34588
23 3.529411765 5.162493 2.6669543 5.11 -0.37756 30.11331 -8.96163
24 10 5.162493 23.401474 -6.92 -0.37756 42.80352 -31.6491
25 3.355704698 5.162493 3.264484 4.51 -0.37756 23.88824 -8.83079
26 10.0611409 5.162493 23.996751 -2.165 -0.37756 3.194942 -8.75604
27 10 5.162493 23.401474 1.48 -0.37756 3.450529 8.98596
28 18.38565022 5.162493 174.85189 0.904 -0.37756 1.642396 16.94627
29 24.66367713 5.162493 380.29618 0.901 -0.37756 1.634716 24.93343
30 12.13872832 5.162493 48.667859 -1.17 -0.37756 0.627961 -5.52825
31 20.3968254 5.162493 232.08488 -1.72 -0.37756 1.802145 -20.4512
32 29.43820225 5.162493 589.31006 -2.78 -0.37756 5.771718 -58.3209
33 36.62921348 5.162493 990.1545 -1.14 -0.37756 0.581315 -23.9915
34 21.65308498 5.162493 271.93962 2.44 -0.37756 7.938644 46.46323
35 6.841395259 5.162493 2.8187128 -0.35 -0.37756 0.00076 0.046271
36 2.692883095 5.162493 6.0989731 0.45 -0.37756 0.684856 -2.04375
37 5.217174239 5.162493 0.00299 1.64 -0.37756 4.070548 0.110323
38 16.13645075 5.162493 120.42775 1.5 -0.37756 3.525232 20.60426
∑(A-B)^2=38883.0582
∑(C-D)^2=703.9311
∑(A-B)(C-D)3.325496
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1. Portfolio Risk¿
¿10.1087
2. Portfolio Average Return ¿ 5.1624933. Market Average Return¿ -0.37756
4. Market Risk(∂M )=√ 703.931138
¿4.30401
5. CovarienceP× M ¿3.325496
38 ¿0.087513
6. Portfolio Beta = 0.087513
4.304012
=0.0047247. Alfa =[5.162493-0.004724*(-0.37756)]
=5.164277
8. CorrelationP× M= CovarienceP× M
∂P×∂M
= 0.087513
10.1087 ×4.30401
= 0.00201126
Conclusion:An investor can maximize the returns of a portfolio by choosing securities with high returns and minimize the risk by diversification of securities. By using completely diversified portfolio, an investor can eliminate most or all unsystematic risk. So the goal of an investor when s/he invests in portfolio of securities is to choose a portfolio with high expected return and low risk. Portfolio management performs this job
In our report we have continued trading from 1st February, 2011 – 31st march, 2011. After completion of our trading period, we have calculated the average return of our portfolio, related risk of our portfolio. Again we have calculated the average market return and risk of the market. We also have measured the correlation between the market and portfolio.
Bibliography:
1. www.fe-bd.com.
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2. www.cpd-org.com .3. www.dsebd.org.4. www.nbr-bd.org5. www.bd –bank.org.6. www.irbd.org7. Invest analysis & portfolio management-Reilly & Brown (8th edition).8. Financial management-I M Pandey (9th edition).9. www.stockbangladesh.com10. Investments-Bodie, Kane, Marcus
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