Boom in Stock Market needs cautious watch

MEDIA reports on Thursday said that the recent boom in the country’s stock market has worried the economists and the government’s high officials, including high officials of the capital market regulatory body. After the market crash in 2010-2011, the turnover on the bourses has risen astronomically in the last few days although it started from November last year. Economists are skeptical and apprehend a further collapse of the stock market as fraud might be concealed behind this sky-high turnover in the capital markets. There was scope for the market to grow further but the way it has been behaving is not ‘normal’. So, investors should cautiously invest in this abnormal market situation avoiding any type of loss.

Report said that the turnover of Dhaka Stock Exchange, which was hovering around Tk 400-Tk 800 crore in November shot up to Tk 2,000 crore on Tuesday, the highest since 2010, before the massive market crash and it hit an all-time high capitalisation of Tk 3,69,502 crore exceeding the earlier high of Tk 3,68,071 crore on December 5, 2010.

According to the sources at DSE, the average transaction was Tk. 499, 421 and 494 crore in the years 2014, 15, and 16 respectively. But last 14 days of this year, it rose to Tk. 1 thousand and 5 hundred crore. Experts said that till now there appears no evidence of panic in the market. But no client should enter the market to achieve astronomical profit investing all deposits. It is also worrying that there has been no massive change prevalent in the economy of the country, which should logically have a parallel in the rise of the stock market. Reportedly, decrease of bank interest rates is leading these investors to speculate in the markets. Mostly the people who incurred huge losses amid the market failure in 2010-11 remain prompt to invest more for the recovery of their losses. It may be noted that 11 types of fraud appear in the stock markets. So, investors without proper knowledge of the market should not invest.

In this situation, government should take heightened security measures to detect the fraud. Besides, Bangladesh Bank should check the stock exposure data, including their brokerage arms and merchant banks, on a weekly basis in the wake of a huge rise in turnover and share prices on Dhaka and Chittagong bourses. Government should also direct the stakeholders to comply with securities rules and regulations properly so that the present situation of the market could be sustained.