Until recently, the Bangladesh stock market appeared to be immune to negative political developments. In contrast to natural and obvious response from other markets to political troubles, the stock trading here, on many occasions in the past, was found to be rather buoyant. However, it was very difficult to say whether such behaviour on the part of the market was genuine or otherwise since the trading on the bourses, as the people's general perception is, is suspected to be prone to manipulation.
A couple of crashes -- one in 1996 and another in 2010 -- are a reminder of that fact. However, it is difficult to say that the manipulators are active always. Yet it is hard to drive away the suspicion. The situation this time around, as it appears to be the case, is different. The prolonged political troubles -- blockade coupled with hartals is now more than two-month old -- have been taking a heavy toll on the economy. Political instability is one factor that lends a poor image to this country which otherwise has immense potential to become an emerging economy. But the onslaught that the economy is having from the ongoing political troubles is an unparallel one in the country's history.
The stock market is also taking the brunt. Both daily turnover and volume of transaction, according to media reports, have plummeted to such a level that the earnings of the bourses and stock brokers are found to be not even enough for meeting their daily expenses. The reforms and other relevant actions initiated so far have apparently failed to boost investors' morale. This fact is evident from the lukewarm response from investors to handsome dividends declared recently by a number of listed companies, including the banks.
There is no denying that the developments surrounding the stock market since the crash of 2010 have not been in line with expectations of stakeholders concerned. The level of confidence of the investors in the market has not been that great. The market during last four years on occasions showed signs of turnaround. But such signs dissipated within a very short period, allegedly, because of the involvement of small-time manipulators.
Since the 2010 market collapse, the government has also initiated a few moves to buoy up the market. But those have not yet succeeded to produce results because the government's approach was half-hearted. Stock market is one of the important indicators of the state of a country's economic health. Unfortunately, that indicator looks now quite pale under the prevailing circumstances. The political troubles have only made things worse for the stock market. The stakeholders do need to make a full assessment of the situation and prepare both short- and long-term measures to boost the morale of the real investors. Notwithstanding the prevalence of strong pessimism, a solution to the current political crisis would emerge, sooner or later. All types of economic activities are expected to pick up in full gear then. The stock market should not also stay behind. But the market needs to be made ready for that time.
Dwindling stock market
FE Team | Published: March 13, 2015 00:00:00 | Updated: November 30, 2026 06:01:00
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