The graph shows how fundamentally vulnerable the product variations of the Bangladesh stock market are.
Is Bangladesh stock market speculative in nature? In this market, the price of shares is increased by the exact rules or research results or the price increase on the basis of rumor?
Let's try to find answers to these questions through analytical analysis. It is said that small investors are facing trouble this market because most of them do not have the factual idea about stock trading. Moreover, it is also said that most investors are interested in short-term profits making rather focus on long term investment. Besides, there is also the dominance of retail investors, manipulation etc.
As the stock market collapsed twice in the country respectively in 1996 and 2010-11, small investors have been more affected due to the collapse of the stock market. The time has come for the right to market dynamic. Stock market of Bangladesh is very small in size, frontier in nature. There is less chance of fundamental research in the market of this country. Literally, the stock market in Bangladesh cannot be diversified. Lack of financial product variation is prevalent. Equities are dominating the market by the mutual funds and bonds.
According to the research division publication, namely Market Review 2016 of Dhaka Stock Exchange, the number of total securities (Equity's) is 560 and the number of other financial instruments is just 45.The question remains as much as investors understand why investors do not invest and how much investors can gain or face risk at the end of the day.
Now let's come to the market professionalism, it is a light of hope that many experts like Chartered Financial Analyst (CFA) are working in the country's market but to strengthen the fundamental on the market, need to involve more educated people. Sadly, no one has the research and training wings except top seven or eight brokerage houses in Bangladesh Capital market.
A common feature of the stock market is the risks in this market, as well as the gambling, speculation and manipulation. Of course, what level it will be, the Bangladesh Securities and Exchange Commission (BSEC) alongside other stakeholders should take care of this.
Now it is a matter of what everyone can invest in the stock market. Most of the stakeholders think investors are not aware of the stock market; they do not know proper investing rules in the Capital Market. This issue is very debatable. Naturally, an investor must not be a Chartered accountant or Chartered Financial Analyst to invest in the stock market, but should have minimum educational qualification to judge the market fundamentals.
For instance, as if my capital is low or, if there is less capacity to hold the risk, then there should definitely be invested in the primary market rather go for Secondary one.Undoubtedly, the stock market of Bangladesh is much more organized. There are many changes in the policy level; many structural changes have been made like demutualization of stock exchanges.
It is high time, the government and policymakers need to be more pro-active like to reduce the equity's dependency from the market as well as to develop a strong bond market for strengthening the Capital Market. The stock market of Bangladesh will be fundamentally based when the constitutional research will be applied both from the investors as well as from policy makers. Using an expert quote for those who are closely related to this market, they can be inspired from that "It doesn't matter what you think the market will do. All that matters is what the market actually does do", as said by William O' Neil.
The writer, a stock market analyst, researcher and financial market columnist, is now serving as a faculty at the Royal University of Dhaka
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