Capital market ends a topsy-turvy year

Sadat Sayem
Heavy inflow of liquidity and entry of fresh investors in the first half of 2008 helped Bangladesh’s stock market sustain the bull run it witnessed in 2007, surpassing all the records in market indicators made during a boom from January 14 in the previous year, the first trading day under the state of emergency.
The market, however, spiralled down towards the yearend, due to a low fund-flow to the market ahead of the national polls held on Monday. But, the closing week of 2008 saw a rebound at the Dhaka and Chittagong stock exchanges.
‘The market saw a downtrend at the later half of the last year as institutional investors had pulled out their funds and remained almost inactive. The trend started in the middle of the last year, but we observed it very sharply only during the last couple of months,’ said Abu Ahmed, a professor of economics at Dhaka University.
Due to the downtrend, the general index of Dhaka Stock Exchange lost 221.87 points, or 7.35 per cent, in last year to close at 2795.34 on December 30, the last trading day of 2008, from the previous year’s close at 3017.21. The benchmark index sank to its lowest in the year at 2459.48 on November 27.
‘As like as 2006, early last year, institutional and big individual investors injected huge funds to the market, finding other investment options limited,’ said Abu Ahmed.
He said long-lasting bullish trend also lured a huge number of fresh investors to the stock market. More retail investors entered the market hoping to make quick capital gains.
‘With leading brokerage houses opening their branches in divisional cities, the retail investors in those areas found direct access to the market, boosting the liquidity situation,’ he said.
During the period, on June 1, the DSE general index touched its peak of 3,207.89 points.
The DSE recorded its highest-ever turnover on October 10 at Tk 590.51 crore. Its market capitalisation peaked to Tk 1,04,380 crore on December 30, rising 20 per cent in the year.
Abu Ahmed said the escalation in the share market did not truly reflect the country’s overall economic performance. The market, which lacks quality shares, has often gone wrong with unusual share price inflations as more funds rushed for a few stocks, prompting interventions of the Securities and Exchange Commission, the stock market regulator.
The SEC’s interventions often resulted in a slowdown of the market, sparking off angry demonstrations of investors against the regulator’s role. The investors, however, sometimes, even took to the streets seeking the commission’s actions in arresting the stock market slide.
Mahmood Osman Imam, chairman of the finance department of Dhaka University, said, ‘The last week’s surge indicated that institutional and retail investors, who had kept an wait-and-see policy in the last couple of months, expected a healthy return in days to come.’
SEC chairman Faruq Ahmad Siddiqi said, ‘Stock market achieved phenomenal growth in the last two years. He hoped that the capital market in Bangladesh would register further growth in the next two years, with telecom sector and good companies from other sectors offloading shares on the market. The introduction of book-building method of initial public offering-pricing will contribute to the expected growth of the capital market, he said.
In 2007, the DSE general index gained 1,434.12 points, or 91 per cent, to close at 3017.21 on December 30.
A total of 15 companies got listed with the country’s bourses, floating IPOs and offloading shares on the bourses through direct listing regulations, in 2008.
 
Courtesy: newagebd.com