Assignment on: Stock Market Problems and Solution in the Context of Bangladesh Capital Market
ASSIGNMENT ON: Stock market problems and solution in the context of Bangladesh capital market
What are the reasons of inefficient stock market in Bangladesh? What can be done to develop the stock market?
Stock market is a financial market, where stocks and bonds are used to buy and sell. Shareholders i.e. investors exchange their shares in the stock market. The current market price of a share is determined by the demand and supply of that particular share. Before we go through the reasons of inefficient stock market I would like to clarify about inefficient stock market.
Inefficient Stock Market It refers that type of stock market which is not stable and healthy for investors. In inefficient stock market price level fluctuates so much. Market can not absorb large number of securities without changing price level. The main cause of share market fall is this, the inefficient stock market. Last year we have experienced a huge crash in Dhaka & Chittagong Stock Exchange.
If we would recall, Dhaka Stock Exchange Gen. Index (DGEN) soared to its highest levels from October to December last year, with the peak on Dec. 5, 2010 at 8,918 points. DSE’s index on Jan. 3, 2010 was at 4568.40 and went up at a staggering 4,350 points or 95.23% increase! But 2weeks later, Jan. 10, 2011, trading on the Dhaka Stock Exchange was halted after it fell by 660points, or 9.25%, in less than an hour, the biggest one-day fall in its 55-year history. Police and angry retail investors clashed after the stock market suffered huge losses.
Now the question is why? We will try to find out in our upcoming discussion the reasons of this huge fall in share market that means the inefficient stock market.
Reasons for Inefficient Stock Market
• Because of power and infrastructure shortages most entrepreneurs could not invest in the real sector (meaning industries).
• Bangladesh was having current account surpluses (huge remittance flows). So more
What are the reasons of inefficient stock market in Bangladesh? What can be done to develop the stock market?
Stock market is a financial market, where stocks and bonds are used to buy and sell. Shareholders i.e. investors exchange their shares in the stock market. The current market price of a share is determined by the demand and supply of that particular share. Before we go through the reasons of inefficient stock market I would like to clarify about inefficient stock market.
Inefficient Stock Market It refers that type of stock market which is not stable and healthy for investors. In inefficient stock market price level fluctuates so much. Market can not absorb large number of securities without changing price level. The main cause of share market fall is this, the inefficient stock market. Last year we have experienced a huge crash in Dhaka & Chittagong Stock Exchange.
If we would recall, Dhaka Stock Exchange Gen. Index (DGEN) soared to its highest levels from October to December last year, with the peak on Dec. 5, 2010 at 8,918 points. DSE’s index on Jan. 3, 2010 was at 4568.40 and went up at a staggering 4,350 points or 95.23% increase! But 2weeks later, Jan. 10, 2011, trading on the Dhaka Stock Exchange was halted after it fell by 660points, or 9.25%, in less than an hour, the biggest one-day fall in its 55-year history. Police and angry retail investors clashed after the stock market suffered huge losses.
Now the question is why? We will try to find out in our upcoming discussion the reasons of this huge fall in share market that means the inefficient stock market.
Reasons for Inefficient Stock Market
• Because of power and infrastructure shortages most entrepreneurs could not invest in the real sector (meaning industries).
• Bangladesh was having current account surpluses (huge remittance flows). So more