The year of investors

http://www.thedailystar.net/newDesign/news-details.php?nid=168134

The year of investors

Sarwar A Chowdhury

It was a boon year for investors, although a record fall this month created adrenaline panic among those who put their money in stocks. There is hardly any investor who made loss in 2010.

The stockmarket witnessed a boom from all sides — the price index, turnover, market capitalisation and its ratio to GDP (gross domestic product), and the number of new arrivals both in terms of issues and investors.

The Dhaka market ranked third globally in terms of performance, according to an analysis of LankaBangla Securities.

The record growth also helped the government get manifold revenues. In 2010, the government received Tk 315 crore tax at source against only Tk 62 crore a year ago.

From January 3 to December 30, the benchmark index of Dhaka Stock Exchange went up by 3,754 points, or 82 percent, to 8,290. The listing of record number of 25 new securities and a continuous rise in prices led the jump in the index.

The total turnover shot up by 172 percent to Tk 400,991 crore, while the transactions went up by 113 percent to 1,697 crore shares and mutual fund units.

Market capitalisation reached Tk 350,000 crore — registering a 84 percent rise. The market capitalisation to GDP ratio stood at 51 percent at the end of 2010.

The bullish trend forced the Securities and Exchange Commission (SEC) to come up with a number of cooling measures.

But the piecemeal regulatory intervention was always criticised by the market intermediaries, analysts and experts. The experts always said the regulator should take long-term measures.

However, the SEC made some positive changes to some of the securities laws. Change in the IPO (initial public offering) rules was a notable one — after the amendment to the regulations, many non-listed companies are now showing their interest to come in the market.

The market needs to be more professional, the experts said.

“There has been improvement in terms of price index, turnover, and entry of new mutual funds and fresh investors,” said Faruq Ahmad Siddiqi, head of capital market wing of Southeast Bank and a former chairman of the SEC.

“However, with the rise in share prices, increased the risk factors. These risk factors can be minimised through professionalism and educating the retail investors,” he said, adding that the regulator should also take more consistent policies.

Leading stockbrokers also think professionalism should be main agenda in the coming years. “Our stockmarket has grown up, and we now need to be more professional,” said Mohammed Nasir Uddin Chowdhury, chief executive officer of LankaBangla Securities.

Bangladesh Institute of Capital Market, which started its journey last month, will play a great role in bringing professionalism in the market, he said.

Although a bullish trend dominated the market most of the time in the year, the market witnessed some dramatic and record falls in December that prompted hundreds of investors to take to the street.

December 19 was a black day for the Bangladesh stockmarket’s 55-year history, as the index on that ‘Black Sunday’ dropped by 551 points that the market even did not witness in 1996 crash.

Finally, the Dhaka market completed a lucrative year ending on the last trading session of 2010 in green with the investors’ optimism of better corporate declarations and return in 2011.

sarwar@thedailystar.net

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