BANGLADESH STOCK MARKETPRESENTATION BY:IMPACT GROUP

WHAT IS A STOCK?

The word stock simply refers to a supply .In the financial world, stock simply means a supply of money a company has raised from individuals or other organizations. If any one buys a stock, then he/she owns a part of a company. This part is called a share. People who own stock are referred to as "shareholders or "stockholders..

WHAT IS A STOCK MARKET? Actually stock market is one of the most important financial institutions of any economy as well as Bangladesh .Stock market is nothing but , an equity market in which shares are issued and traded either through exchanges or over the counter markets

HISTORICAL CONTEXT OF BANGLADESH STOCK MARKET The journey of Bangladesh stock market started on April 28,1954 as East Pakistan stock exchange association Ltd.But trading on this market started in 1956. The exchange was renamed on June 23, 1964 as Dhaka stock exchange (DSE) Limited.

DHAKA STOCK EXCHANGE (DSE) It is the first and main stock exchange of Bangladesh It is located at Motijheel in Dhaka It was incorporated in 1954 Its operation started on May 14, 1964 It is registered as a public Limited company & its activities are regulated by Its rules & regulations In the beginning it used cry-out system to trade Then it installed automated trading system on August 10, 1998

DHAKA STOCK EXCHANGE (CONTINUED) Its working days is 5 in a week without Saturday & Sunday Its trading time is started from 11.00 am to 15.00 pm(local time) It has different investment options for an investors such as - A) Ordinary share B) Debenture C) Bond & mutual funds etc.

FUNCTIONS OF DSE Listing of companies Providing the screen based automated trading of listed securities Market administration & control Market surveillance Publication of monthly review Monitoring the activities of listed companies Announcement of price sensitive or other information about listed companies through online

CHITTAGONG STOCK EXCHANGE(CSE) It is the second stock exchange of Bangladesh It was incorporated on November 4, 1995 It started its trading through cry-out system Then it started first automated trading on 2nd June, 1998 It provides internet trading service on 30th May, 2004 Its working days & holidays are same as like as DSE It has four different markets like- A) Public market B) Block market C) Spot market & D) Odd lot market Trading is done by all these four markets

STRUCTURE OF BANGLADESH STOCK MARKET

There are two types of structure of Bangladesh stock market like- A) Primary market B) Secondary market PRIMARY MARKET: Initial public offerings(IPO) , new share issuance of a company comes through primary market. SECONDARY MARKET: Secondary market deals with existing securities or previously issued securities. Securities can be sold or bought from this market. This market is also divided according to its different trading characteristics. These characteristics are given below-

STRUCTURE OF BANGLADESH STOCK MARKET (CONTINUED)

PUBLIC MARKET: Instruments are traded on this market in normal volume which is called lot share.SPOT MARKET: Trading is done in normal volume under corporate actions & must be settled in 24 hours. BLOCK MARKET: In this market bulk volume of instruments are trades through pick &fill basis.ODD LOT MARKET: Odd lots of all instruments are traded through pick &fills in this market. Basically odd lots generated from bonus & rights issues.

SECURITY & EXCHANGE COMMISSION (SEC)

It has been empowered to control stock marketThe government of Bangladesh founded security & exchange commission on 8th June, 1993 under the security & exchange commission act, 1993. Its aim is to protect a) Investors interest b) Improvement of securities market c) Appropriate issuance of securities d) Proper guiding of securities laws It consists of a chairman & four members

SECURITY & EXCHANGE COMMISSION(CONTINUED)MAIN FUNCTIONS OF SEC:

Registering & regulating the business operation of DSE,CSE, stock brokers, merchant banks, underwriters and other intermediaries. Developing investors education, providing training for intermediaries, executing market research and publishing those. Controlling every authorized self regulatory organizations Inspecting and controlling fraudulent and unfair trading in security markets Adjusting and investigating of any intermediaries or stock exchanges Collective investment scheme registering & controlling.

WHAT IS A STOCK MARKET CRASH?A stock market crash is a sudden dramatic decline of stock prices across the stock market, resulting in a significant loss of paper wealth. Simply we can say stock crash as a rapid and often unanticipated drop of stock prices.Stock market crashes wipe out equity-investment values and are most harmful to those who rely oninvestment returns for retirement. Well-known U.S. stock market crashes include themarket crashof 1929 and Black Monday (1987).

STOCK MARKET CRASHES IN BANGLADESH CRASHES IN BANGLADESH*1996*2010-11*2012

CRASH OCCURRED IN 1996During the crash of 1996 paper shares used to be sold in front of DSE and it was not easy for investors to indentify fake and original shares.There was no automated trading sys-tem, surveillance was not enough strong and no circuit breakers as well as international protections.In 1996 the market experienced dramatic change and pushed the price index up by 337%. DGEN Index recorded high growth from July and stood at 3648.7 points or by 280.5% at DSE as well as CSE also.Finally abnormal rise of share prices started to fall and Bangladesh stock market experienced its first crash of the history in 1996.The cause of stock market crash in 1996 was the failure of market regulators.

CRASH OCCURRED IN 2010-11

scenario of stock market crash in 1996 and crash in 2010-11 are totally differentTimeline of historical fall of the crash has been divided into two sections which are December 2010 and January 2011.Due to political unrest of Bangladesh state of emergency was declared and military took power of the country in 2007.According to CPD (2011), the total number of BO Account holders on 20th December, 2010 reached to 3.21 million though the number was 1.25 million in December 2009.Most of these new investors dont have enough knowledge about the stock market but invest their most or all savings in the market.

To minimize the cost of bearing excess liquidity , many financial institutions & its officials as well as other people took loan and invest in the share market. This made a huge influx of liquidity in the share market. 5th December, 2010 as the last glorious day of the year for the investors of Bangladesh stock market. On this day DSE General Index (DGEN) gained its all-time highest 8, 918.51 point & broke all old records of DSE turnover by Taka 32.50 billion.19th December was a historical day of the financial year 2010-11 in Bangladesh stock market. On this day DSE witnessed its biggest one day fall in 55 years history.On 9th January DSE General (DGEN) Index declined by 600 points & . On 10th January Dhaka Stock Exchange General (DGEN) Index lost by 660 points or 9 percent & Chittagong Stock Exchange Selective (CSE) Index declined by 914 points or 6.8 percent within 50 minutes of trading. It had broken all previous records of decreasing index.

CRASH OCCURED in -2012Mainly the crash of 2012 in bangladesh share market occurred due to the highly participation of common uneducated & unexperienced people those who have ever failed to realize what is a share & even a share market?Banks and other financial institutions including MFs have increased their participation directly n the markets and also through loaning money to BO a/c holders for trading on margins.The upsurge began when Grameen Phone offered a large IPO (over 4000 crore) When the index reached 6000 or so from under 3000 journalists asked the finance minister about it and he quickly dismissed that the market was not overheated.

The following reasons played the vital role for the crash:

Imbalance of demand and supply of shares in DSE & CSE.Investors didnt have idea about financial report of listed securities / unfair audit report buy shares based on rumor & without study .Majority of general investors dont have knowledge about capital market .Intervention of Bangladesh Bank (central bank). Over expectation of general investor .Liquidity crisis .

STEPS CAN BE TAKEN AGAINST THE MARKET CRASHROLES DONE BY THE :-02.REGULATORS04.BANGLADESH BANK & MARKET ECONOMY03.INVESTORS and01.GOVERNMENT

RECENT CONDITION OF BANGLADESH SHARE MARKETThe recent condition of Bangladesh Stock Market is gradully developing.Many companies share prices are increasing day by day.Our most respectful Prime Minister Sheikh Hasina declared that during her Awami Govt. they will strongly establish a powerful strategic stock market.DSE, CSE, SEC & Bangladesh Bank hardly trying to recover the situation.They are taking effective action against the culprits who were responsible for the Market Crash.Investors are becoming more conscious than before.The renowned economists of Bangladesh hope that within the beginning of 2013,our Stock Market will regain its previous strategic position.

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