Written by The Banking Post
Stockbrokers have urged the securities regulator to overhaul the sectoral classification of companies listed on the Dhaka Stock Exchange (DSE), calling for alignment with globally recognised standards to enhance market transparency and analytical accuracy.
In a letter to the chairman of the Bangladesh Securities and Exchange Commission (BSEC), the DSE Brokers Association (DBA) said the existing classification system suffers from major inconsistencies, creating distortions in sector-based analysis and complicating investment decisions.
At present, 651 securities are listed on the DSE under 22 categories, including banks, engineering, and pharmaceuticals & chemicals. According to the brokers, several companies are grouped under sectors that do not reflect their actual business exposure, undermining the reliability of market analysis.
Proper sector classification is crucial for analysts and prudent investors at home and abroad, as sectoral performance is widely used to assess economic trends, consumer behaviour, and income growth. Misclassification can lead to inaccurate conclusions about market conditions and sector outlooks.
The DBA pointed out that Marico Bangladesh is currently classified under pharmaceuticals and chemicals, while British American Tobacco Bangladesh falls under food and allied. Under the Global Industry Classification Standard (GICS), both companies would be grouped under consumer staples. Similarly, companies such as Walton, Singer, Bata, and Apex would be categorised as consumer discretionary, reflecting their sensitivity to consumer demand.
The association also noted that there is no globally recognised sector called “miscellaneous”, yet such a category exists on the DSE, further weakening analytical clarity.
The brokers said many securities were initially classified when the market had a limited number of listings, but the rapid growth in the number of companies now makes reclassification urgent. They also highlighted that the categorisation of government bonds, corporate bonds, and mutual funds has remained unchanged for years, despite evolving global practices.
Global capital markets typically follow structured systems such as the GICS, developed by MSCI and Standard & Poor’s, or the Industry Classification Benchmark (ICB). The GICS framework alone includes 11 sectors, 25 industry groups, 74 industries, and 163 sub-industries, offering a more consistent and comparable structure.
According to the DBA, aligning the DSE’s classification with such international standards would improve market transparency, strengthen sectoral analysis, enhance global comparability, and attract foreign investment. It would also reinforce the stock market’s role as a key indicator of economic trends.
The association urged the regulator to initiate a comprehensive review of the existing system and adopt an internationally aligned framework in consultation with relevant stakeholders, describing the move as a vital step towards strengthening the credibility and global integration of Bangladesh’s capital market.
