BB Bond

DHAKA, June 15 - The central bank said on Sunday it would auction 4 billion taka worth of five-year Bangladesh government treasury bonds next Tuesday.

The coupon will be paid semi-annually on the basis of the cut-off yield rate, the bank said.

All the appointed primary dealers banks and financial institutions who are maintaining current accounts with the central bank are eligible to participate in the bids.

Candle sticks: technical analysis

Heikin Ashi Candle sticks:
There are five primary signals that identify trends and buying opportunities:

Hollow candles with no lower "shadows" indicate a strong uptrend: let your profits ride!
Hollow candles signify an uptrend: you might want to add to your long position, and exit short positions.
One candle with a small body surrounded by upper and lower shadows indicates a trend change: risk-loving traders might buy or sell here, while others will wait for confirmation before going short or long.
Filled candles indicate a downtrend: you might want to add to your short position, and exit long positions.
Filled candles with no higher shadows identify a strong downtrend: stay short until there's a change in trend.

What is a candlestick?

If the stock price went up the body of the candle is white or green and open price is at the bottom and closing price at the top.

If the stock price is down then the body of the candle is filled or red and the open price at the top and closing price at the bottom.

Investing in DSE or CSE

Whenever anyone asks me, “I’ve a little savings, how to make it grow?" Without any hesitation I straight forward suggest them to put it in the stock market.

Why?

Because I think for little amount of savers it is the best option to multiply their money. Now let us see why it is the best option among some alternatives.

1. They can not start a business of their own because they have too little savings to start with or they don't have enough time for it.

2. They can put their money in government issued savings certificate which eventually provide 8%-12% interest. Now if someone have a savings of Tk. 100,000/= at 12% interest his return will be only Tk. 12000/= a year- assuming no taxes on this return. But having a 10% tax this return is only Tk. 10800/= only.

3. In case of putting the money in the bank, it provides 10%-13% return on fixed deposits and even lower in savings account and pension schemes. Here too the return is at best 13000/=. If we deduct 10% govt tax, it will be only 11700/=

4. Now focus on stock market. Usually what do small investors do? At the starting level they usually rush to catch the IPOs. Most of the IPOs come with 5000/= market lot. It means someone can invest his money even if his savings is as small as Tk. 5000/=. Now what is the earnings possibility? Assume Tk. 100,000/= as investment capability as before. Now he can apply for 20 lots of shares Tk.5000/= each. What is the possibility to get at least one lot of share. This possibility varies depending on the size of the IPO. Historical evidence shows that for a renowned company number of applications is much higher than others. Considering that issuing firm is a renowned one, applications are 5-7 times it the size of the issue is more than Tk. 500million. For an issue size of less than Tk. 100million number of application is 30-40 times the size of the issue. Assuming the size is in between Tk. 300-700 million we can expect applications not more than 10 multiple of the issue size. In this case at least two lots out of twenty has a very much possibility to click. Now here comes the final question of return. On an average returns from IPOs are not less than 100%. So, the return will be at least Tk. 10000/= from two lots of stock. Usually it takes approximately three months to start trading of a new issue (time considered from the time of subscription to trading).The return stands for 10% on the whole investment in three months and annualized return of 46.41%!

There is another dimension of stock market- secondary trading. From BD perspective still it is very much risky for new comer. But people who have the least technical analytical ability of stock market- can get a super profit.

From above discussion you already decided to plunge into stock market.

But HOW?

Here comes the reply.

Step-1)

To invest in stock market you must have a Beneficiary Owner (BO) account with a Depository Participant (DP). Just go to a DP, collect the BO a/c opening form, fill it up properly and submit. It doesn't take more than a week process the BO a/c. Generally it takes only 2-3 days(BO account opening form is given after this topic).

Step-2)

As soon as you have a BO a/c, you are registered to invest in stock market. Your BO are accompanied with a 16digit BO ID and client code given by your broker.

Now you can invest in IPO and secondary market. Foloowing documents are required to open an account in Marchent Bank divission(MBD) of any broker house or bank:

1. 02. copy Passport size photo of you.

2. 01 copy Passport size photo of nominee.

3. Photocopy of Passport /ID Card/Nationality certificate.

4. 01 copy of Bank statement.

5. Check or cash for depositing money for your account.

After all these,for secondary trade just go to your broker place your order for stock purchase and pay for it. That's all, easy and simple. Even if you request you can even trade over phone,that’s all about it.You've invested in stock market!

If you want to subscribe for primary share commonly referred as IPO you just have to collect the subscription form fill it up and submit to the bankers to the issue (names of the bankers to the issue are generally printed at the back of the form) with the amount of money required. And you did it all!

P/E ratio explained

A valuation ratio of a company's current share price compared to its per-share earnings.

Calculated as:



For example, if a company is currently trading at $43 a share and earnings over the last 12 months were $1.95 per share, the P/E ratio for the stock would be 22.05 ($43/$1.95).

EPS is usually from the last four quarters (trailing P/E), but sometimes it can be taken from the estimates of earnings expected in the next four quarters (projected or forward P/E). A third variation uses the sum of the last two actual quarters and the estimates of the next two quarters.

Also sometimes known as "price multiple" or "earnings multiple".

In general, a high P/E suggests that investors are expecting higher earnings growth in the future compared to companies with a lower P/E. However, the P/E ratio doesn't tell us the whole story by itself. It's usually more useful to compare the P/E ratios of one company to other companies in the same industry, to the market in general or against the company's own historical P/E. It would not be useful for investors using the P/E ratio as a basis for their investment to compare the P/E of a technology company (high P/E) to a utility company (low P/E) as each industry has much different growth prospects.

The P/E is sometimes referred to as the "multiple", because it shows how much investors are willing to pay per dollar of earnings. If a company were currently trading at a multiple (P/E) of 20, the interpretation is that an investor is willing to pay $20 for $1 of current earnings.

It is important that investors note an important problem that arises with the P/E measure, and to avoid basing a decision on this measure alone. The denominator (earnings) is based on an accounting measure of earnings that is susceptible to forms of manipulation, making the quality of the P/E only as good as the quality of the underlying earnings number.

EPS Explained

The portion of a company's profit allocated to each outstanding share of common stock. EPS serves as an indicator of a company's profitability.

Calculated as:



In the EPS calculation, it is more accurate to use a weighted average number of shares outstanding over the reporting term, because the number of shares outstanding can change over time. However, data sources sometimes simplify the calculation by using the number of shares outstanding at the end of the period.

Diluted EPS expands on basic EPS by including the shares of convertibles or warrants outstanding in the outstanding shares number.

Earnings per share is generally considered to be the single most important variable in determining a share's price. It is also a major component of the price-to-earnings valuation ratio.

For example, assume that a company has a net income of $25 million. If the company pays out $1 million in preferred dividends and has 10 million shares for half of the year and 15 million shares for the other half, the EPS would be $1.92 (24/12.5). First, the $1 million is deducted from the net income to get $24 million, then a weighted average is taken to find the number of shares outstanding (0.5 x 10M+ 0.5 x 15M = 12.5M).

An important aspect of EPS that's often ignored is the capital that is required to generate the earnings (net income) in the calculation. Two companies could generate the same EPS number, but one could do so with less equity (investment) - that company would be more efficient at using its capital to generate income and, all other things being equal, would be a "better" company. Investors also need to be aware of earnings manipulation that will affect the quality of the earnings number. It is important not to rely on any one financial measure, but to use it in conjunction with statement analysis and other measures.

Let's analyse stock!

The Big Picture:

1. GDP eyeview: Look at the overall Bangladesh economy. GDP growth ratee can give you an idea.
2. Inflation: See how inflation cuts your income in the deposite schemes.
3. Research Economic data; Ohter economic trends should be kept at a perspective.

Current Performance:

1. Look at the current performance at the stock market.
2. Determine uptrends and downtrends of industries.
3. relate industry information with macroeconomic data.

Fundamentals:

1. Choose a company to research in depth.
2. Look up company's public financial information
3. Consider information per share terms.
4. Compare growth using percentages.
5. Exmine company's balance sheet.

Technical Perspective:

1. Analyse your stocks technical situation.
2. Look up per share price.
3. Research technical indicators
4. check stock charts.
5. Create a balanced portfolio