Is there a way out?

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Mahmudur RahmanWhen the ordinary citizen declares an intention to go on hunger strike, there is something badly amiss somewhere. Those who pity small investors, ruined by unholy speculators and profit-mongers of the stock market need to turn the emotion in to something stronger. Government intervention by way of funds pumped in and institutional investments to the tune of billions has not had any effect and the index continues to go down. Of course, it will. If people continue to siphon off money through artificial and temporary highs and fundamentals continue to be ignored, there can't be improvements. And now even policy decisions are being back-tracked on with the National Board of Revenue (NBR) declaring tax cuts on earnings from the stock market, proposals to allow black-money in to the bourses with no questions asked and others. The government probe that was to have happened to find out more details hasn't emerged with any reports and even new initial public offerings (IPOs) have failed to shake things up. Banks that made a killing and went overboard, in terms of percentage of liabilities that they could invest have suddenly become over cautious. So from as high as 40%, investments have come down to the low single digits. Nothing seems to have emanated, following the Finance Minister's declaration that the banks will be required to make fresh injection of liquidity after their huge profit-taking. It's almost as if the traditional fixes, pretty much like the Euro zone bail-outs aren't working at all. It is a conundrum. Investors who have put in their life-time savings and mortgaged everything in sight haven't yet recovered their investments and have probably lost all their gains from the days when the market was buoyant. The confidence just does not seem to be there anymore. New IPOs that at one time were clattering with each other to make the list have disappeared; at least for the time being. While the government is trying to persuade companies to join up, there is a general apathy among the solid ones to do so given that the yo-yo nature of the stock market has so far only succeeded in grossly over-valuing poorly performing companies while under-valuing those who are actually doing well. For the sensible investor not consumed by over-night greed or looking to it for a daily living, there are many solid companies still out of the listed ones that could ensure a fairly decent rate of return over the years. The mistake is if these and the other well-performing ones are expected to create magical and high-value returns in a short period of time. Too many mistakes have been made in the past. Now is the time to return to the fundamentals and provide both protection and clarity for those choosing to invest. In the meantime those who have been identified or about whom clarity is sought need to be brought to the fore. (E-mail: mahmudrahman@gmail.com)