BANGLADESH STOCK MARKET

PRESENTATION 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 2 nd June, 1998
It provides internet trading service on 30 th 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 likeA) 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)

1.

PUBLIC MARKET: Instruments are traded on this market in normal volume which is
called lot share.

2.

SPOT MARKET: Trading is done in normal volume under corporate actions & must
be settled in 24 hours.

3.

BLOCK MARKET: In this market bulk volume of instruments are trades through pick
&fill basis.

4.

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 market

The government of Bangladesh founded security & exchange commission on 8 th 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 on investment returns for retirement. Wellknown U.S. stock market crashes include the market crash of 1929 and
Black Monday (1987).

STOCK MARKET CRASHES IN BANGLADESH

CRASHES IN BANGLADESH

*1996
*2010-11
*2012

CRASH OCCURRED IN 1996

During 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 different
Timeline 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 alltime 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 -2012

Mainly 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 CRASH

ROLES DONE BY THE :-

01.GOVERNMENT

02.REGULATORS

03.INVESTORS and

04.BANGLADESH BANK &

MARKET ECONOMY

RECENT CONDITION OF BANGLADESH SHARE MARKET

The 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.

THE END