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Expatriates’ comments on "Share Market"
*** The Daily Star invites its readers to participate in the following Internet discussion groups by sending or faxing Internet posts to: M. Shamimuzzaman. Page-in-Charge, "Live from the Internet", The Daily Star, House it 11, Road it 3, Dhanmondi R/A, Dhaka-1205. We will mail your letters to the Internet and responses will be published the following week. Letters should be titled and be no more than 100 words. ***
Jamal Munshi munsht@sonoma.edu San Francisco. CA. USA Don't curb the curb market!
On a recent trip to dhaka I was able to observe the curb market in operation In front of the dhaka stock exchange (incidentally the word is 'curb' and not kerb), there on the sidewalk" buyers, sellers, and dealers of shares mingled, argued. haggled, and traded shares, street vendors sold tea. cigarettes, dse quotation sheets, form 117 for transfer of shares and debentures, and annual re-ports. here ordinary bangladeshis were buying and selling shares like we buy and sell anything else, since the share market did not go to the bangladeshis the bangladeshis had come to the share market.
This is an encouraging and healthy development for our country and one which must be nurtured and allowed to grow and flourish, of course the regulation of the market must be extended to protect investors in such a market structure, but i am afraid that entrenched and vested interests may see the curb market as a threat and be tempted to regulate the curb market out ol existence, this to me would be a tragedy for them and for the country.
In my 1992 paper (http: / / munshi.sonoma.edu / wo rkingZmonterey.html) 1 noted that a serious structural weakness in Bangladeshi capital markets was the virtual absence of a retail function, a well ' Weveldped' ci»|Mtal market . Dievli^ttfSjjl trough whMl’lVf; savings, households can flow fnto investments In ‘real-’pro- 1 ductive assets, it also acts as a gateway for easy flow of foreign portfolio investment into the country, but in the long run foreign investment and trading among a handful of dhaka elite can have only a limited impact on the growth and liquidity of capital markets in Bangladesh, for the market to mature it must find a way to reach the people.
Although the dse has not
been proactive in this regard, the people have miraculously found the dse by themselves and through the curb market they will be able to bail it out and extend the market's reach. Growth of institutions such as the curb market will build the market's retail function, and with proper guidance and regulation. the growth in the retail function will result in growth of capital markets and that in turn will bring new economic prosperity to the country. By the way. our nascent capital market will get a big boost if the government stops dragging its feet and brings privatized national enlerprises to the market.
AU Salman salman@lords.com Bangkok. Thailand:
1 used to purchase share in Bangladesh I am aware of the .harasment done by the members of the stock exchange 1 have lost nearly 1 million TK for some activities done by this illitarate members of Dhaka Stock Exchange. So if we want to improve the share market of Bangladesh we have to appoint new members with sufficient knowledge.Now we have only 195 members in the Dhaka Stock Exchange we have to increase it to OCX) we also have to stablish the National Stock Exchange and make the share market more flexible So that prices of share can not increase or decrease at a higher level. Think of Singer Bangladesh Ltd. It is a trading company it has no ground to go at price 11^4000 IWibH weht 4t Is TMah’
sharp ip now priced afouqd 10000. A lot of people lost everything by investing in this Singer. That is another reason that foreign investors does not come to Bangladesh because there calculation is perfect but Stock Exchange of Bangladesh does not go allong with there calculation it is totally a reumer based share market.
So in other hand we have to Improve the share market into an information based share market. Regulation must be im-
posed that every company which is listed in the Stock Exchange must send financial report of the company to the shareholder after every three month not once in a year so that the shareholder will know details about the company.
These steps that I have described must be taken immidi-ately to improve the slandered of the share market in Bangladesh.
Shabbir A khan SKHAN72 78@VAX2. WINONA. M SUS.EDU
Minneapolis. USA:
Bangladesh Share Market has launched to World Share Market - when I first leared this news in January 1995 I was delighted. And I heard few days ago that Bangladesh Share Market is in real trouble. The share holders are counting whether they are going to get their invested money back or not. There are companys in papers but not in real. How come our authority let this thing happen? What's are they doing? Jaffor Ullah aullah@nola.srrc.usda.gov Netu Orleans. Louisiana. USA:
Central Bank Should Stay Out of Stock Market
It's an unwise decision on the part of Bangladesh's government to offer loans via Central Bank to the stock traders. They are doing it in the name of aiding "Liquidity in the Market.” We think it’s a foolish . move of the Hasina Administration. We know too 'well the mentality of our un-' ■'^crupuiblfs busWTessmen jmr stock traders, hi the past these people have taken huge loans from the commercial and Industrial Development Banks without paying a nickel to the creditors. The results wreaked havoc to the economy of Bangladesh, an emerging nation. The question is : Should we allow it to happen again?
The nation has suffered enough from the misguided economic policies of the past governments. How many times do we have to repeat the mis-
takes of the past? We think it js about the time that our government follow a path of economic austerity and refrain from promulgating these dubious policies. The present policy of giving loans to the stock traders is bound to fuel specula tions in the financial markets in Dhaka and Chittagong. One thing Dhaka Stock Exchange does not need is "Speculation.” We have enough of that in the investment communities due to ignorance, lack of education and superstitions.
As reported, some small stock traders have sold their lands lo finance their investments in the market. These risk-takers are following a standard practice of shifting assets from real-estate to financial assets with the hope of a better return of their capital In a Bull Market these stock traders will be rewarded handsomely. whereas, in a Bear Market' the same investor will be punished mercilessly. And the latter is what has happened recently in Bangladesh. Some stock traders have complained bitterly about losing money in the down-drift of the market. Now consider the Central Bank getting into the act at this juncture. By providing loans to the stock market novices or dabblers. the government will be taking undue risks which they shouldn't be taking. In the event of a loss these traders will declare themselves bankrupt and walk away from the loan. The end result will be loss for the Central, Bank- There is, > । howewn;> anol her hcoim r jo Ulin,. der which the dabbler makes huge windfall profits in a rising market. In this case, he pockets both the profit and principal, and vanishes into the thin air. Who is loser then'.’ The policy makers in Bangladesh should think twice before implementing a decision like this one. There is still time to revoke or annul the decision. It will save the nation an enormous sum of money, and al the same, time squash speculation from the financial market.