Calling for alignment with international standards, the DSE Brokers Association of Bangladesh (DBA) has urged reforms to the sector classification of companies listed on the Dhaka Stock Exchange (DSE).
In a letter to Bangladesh Securities and Exchange Commission (BSEC) Chairman Khondoker Rashed Maqsood, DBA President Saiful Islam said on Wednesday that the existing sector classification framework of the DSE has remained unchanged for many years and no longer reflects current global capital market realities.
At present, the DSE follows a 22-sector classification system that includes government bonds, corporate bonds and mutual funds. According to the DBA, this structure has become outdated and inconsistent with international best practices.
Pointing to global trends, Saiful Islam said most international capital markets now follow the Global Industry Classification Standard (GICS) or the Industry Classification Benchmark (ICB), frameworks that allow sector-based market analysis to be more transparent, comparable and effective.
He added that GICS offers a globally consistent analytical structure by organising companies across multiple layers of sectors, industry groups, industries and sub-industries.
Several inconsistencies in the current DSE classification were also highlighted in the letter.
For instance, Marico Bangladesh Limited is listed under Pharmaceuticals and Chemicals, while British American Tobacco Bangladesh appears under Food and Allied. Under international standards, both companies would fall under the Consumer Staples sector.
Similarly, the letter said companies such as Walton, Singer, Bata and Apex would be more appropriately placed under Consumer Discretionary, better reflecting their actual business exposure and sensitivity to consumer demand.
According to the DBA, sector-wise performance analysis plays a critical role in understanding economic trends, consumer behaviour and income growth patterns.
An outdated or inconsistent classification framework, however, weakens such analysis and creates distortions for investors, researchers, policymakers and international stakeholders, the letter said.
The DBA also noted that strong performance in consumer discretionary sectors often signals rising income levels and economic growth, while the relative outperformance of defensive sectors compared to cyclical sectors may indicate increased economic caution.
Adopting an internationally recognised sector classification system would enhance market transparency and improve comparability with global markets, the association said.
Such a reform would also boost foreign investor confidence and strengthen the role of the capital market as a leading economic indicator.
The DBA urged the BSEC to initiate a review of the existing DSE sector classification system in consultation with relevant stakeholders.
Expressing optimism, the association said it hopes the reform would strengthen the credibility, analytical depth and global integration of Bangladesh’s capital market and reinforce confidence among both domestic and foreign investors.
