The saying that every cloud has a silver lining does not seem to be true for the Bangladesh stock market.
For nearly nine years since the collapse of the market in 2010, the market has never been truly buoyant. Some people resorted to tricks and manipulation on occasions to infuse artificial buoyancy which proved to be unsustainable.
The situation has now reached to such a state that all concerned have given up hope about a market turnaround in the near future.
The main index of the Dhaka Stock Exchange came down to nearly 5,000 mark last week after so many ups and downs in recent years. The market is a truly desolate one with few genuine investors putting in their money in stocks. The daily turnover now hovers between Tk 3.0 and 4.0 billion. On a very dull day, the turnover is even less.
Though many investors do their trading online or advises their brokerage houses over telephone, it is not difficult for anyone to read the true state of the market.
For a thriving economy that is growing at a rate of over 8.0 per cent, a stock market having a daily turnover of Tk 3.0 to Tk 4.0 billion and sinking indices is a misfit.
The policymakers do highlight all the positives of the economy, but they consciously avoid any mention of the deplorable state of the stock market. That is quite natural. Truths about the stock market might prompt many to raise unpalatable questions.
Should the stock market situation be so bad, given the unattractive return the people are being offered by alternative investment options?
For genuine investors, the issues listed with the bourses are not offering anything attractive. The blue chips are over-priced and investors would get a very insignificant return on their investment from those. Besides, putting money in many other issues, including the new ones, is considered risky. Moreover, most investors have lost confidence in the stock market. Investors got the first blow in 1996 and the second one in 2010 knocked them down on to the ground.
Yet instances are there where stock markets regained investors' confidence following proper implementation of corrective measures.
Unfortunately, that has not happened in the case of Bangladesh stock market. The relevant authorities, including the Bangladesh Securities and Exchange Commission (BSEC) have implemented a number of policy actions, but the net outcome has been almost zero. Why is so?
There is no denying that proper diagnosis remains to be the first and foremost task to detect the cause of any illness. Since the market has not been responding to the actions taken by the authorities concerned to attract investors, one cannot be blamed for questioning the quality of diagnosis, if there was any following the latest collapse of the market in December 2010.
The securities regulator has amended a number of old rules and formulated new ones with a hope of infusing dynamism into the stock market. But the hope has largely been dashed, allegedly, for its lack of interest in dealing with market manipulators, both influential and minor ones.
The manipulators having strong links with powerful quarters do not swing into actions always. They wait for opportunities and when those arrive they create an environment that lures thousands of innocent and ignorant investors who, ultimately, burn their fingers. The small-time manipulators, in contrast, are far more active fortune hunters. They do float rumours and create their own groups to mislead general investors.
Even in a dull market the latter groups are found very active in carrying out their manipulative operations.
For instance, the prices of many underperforming issues soared 9.0 to 37 per cent during last three weeks when good stocks continued to lose money in keeping with the market trend. What is more interesting is that these companies do not have any undisclosed information that could create any sort of craze among the investors. Some people are playing with these small-cap companies belonging to B,N and Z categories.
Playing with small-cap underperforming issues along with the newly listed ones by a section of so-called investors through spreading all sorts of rumours has rather been a common event in recent years. Some people do feel that the market would have been far duller without these small-time manipulators!
Some market insiders, however, tend to believe that manipulators have been cashing in on the decision taken some years back to reduce the face value of all issues at Tk 10 each. Such lowering of face value has made things easier for the manipulators to play with even high-priced stocks.
However, most people find the decision to reduce the face value a right one. They feel that actions against the manipulators need to be initiated by the BSEC and relevant others. Real investors who are staying away from the market want the securities regulator to be far more active and aggressive in dealing with manipulators, both powerful and lesser ones.