Finance Minister AMA Muhith last Thursday again took a swipe at 'fatkabajes' whom he held responsible for destabilising the stock market.
"They are not investors at all. They are a band of fatkabajes responsible for destabilising the market, Muhith said during a meeting with the members of the boards of directors of two demutualised stock exchanges at the finance ministry's conference room.
The finance minister was right in his diagnosis that some people were behind the volatility of the stock market. But the word he chose to describe them possibly was not appropriate.
The meaning of the word, 'fatkabaj', according to the 'Bengali to English' dictionary, published by the Bangla Academy, is 'speculator'. The Bengali meaning of share market, according to the same dictionary, is 'fatkabazar'.
It is thus obvious that fatkabajes would operate in the fatkabazars. Besides, speculation and share market are intertwined despite the fact that speculation is done on the basis of inconclusive evidence. Even there is an element of speculation in the investment decisions of a long-term and enlightened investor.
The finance minister's observation that the tradition of holding shares for a long time is yet to develop in Bangladesh is based on facts. Most investors here are more interested to get handsome return on their investment overnight. They are least interested in getting return in the form of annual dividends.
However they do not deserve any rebuke for not being long-term investors. It is none but the government is to blame for the stock market being immature and shallow.
The Bangladesh stock market until the late '80s was almost a non-entity. Following the country's transition to democracy in 1991, investors started going to the market in a small numbers. The market was growing at a slow but steady pace. That was the perfect way of a stock market becoming mature.
But the 1996 scam derailed the market from the normal growth-path. Taking advantage of paper-based trading, an inefficient regulator and an indulgent administration, the manipulators dealt almost a deathblow to the market. It took nearly a decade for the market to recover. The investors who had deserted the market following the 1996 bubble burst started coming back at a slow pace. The market started demonstrating buoyancy during the later part of the military-backed caretaker government.
However, with the installation of an elected government in January 2009, the manipulators, old and new, plotted to make use of the buoyancy in their favour and cheat the investors who wanted to be rich overnight. And they could manage all the support they needed from the securities regulator and the powerful quarters.
The probe body that was formed by the government after the 2010 market collapse has identified a few -- not all -- manipulators and also some reasons for the market crash. But the probe body could expose only a tip of the iceberg. The government tried to address some of the issues mentioned by the probe body and ignored many others.
The government has tried a good number of measures to restore investors' confidence during the last four years. But the market has not responded well. In fact, the market is not supposed to respond for the basic fact that the investors who had rushed in to the market throughout 2010 were not investors in the real sense. They had come to the market to become rich within the shortest possible time. Some of them made money but did not leave the market because of the greed factor. They wanted to make more money but finally got caught in the steep fall of the market. These investors, who came in their millions, have deserted the market slowly after a wait for months.
The Bangladesh stock market is one of those markets that usually do not respond to economic or political developments both at home and abroad. It has developed a unique style of operation-- a few points up one day for no reasons and a few points down next day, that too, for no reasons.
When a handful of 'small investors' take to the street protesting a substantial fall of stock prices, the market starts rising. It remains a puzzle as to why the market would go up in the face of protests by the so-called investors. Any street protest is not supposed to encourage people to buy stocks. Rather one would expect the opposite to happen.
However, the demutualisation of the stock exchanges has been a step in the right direction. If the boards of directors of the exchanges follow rules strictly, securities regulator takes a proactive attitude towards the market development and audit firms maintain total honesty and integrity while preparing the financials of the listed companies, there could be a healthy growth of the market where the long-term investors might feel encouraged to enter in line with the expectation of the incumbent finance minister.
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