Rumour-based investment rules the roost in DSE
Thursday, 18 September 2008
Kayes M Sohel
Rumour-based investment rules the roost of the stock markets, putting cap on efforts made by the securities regulators to make the investors aware about how to choose the fundamental-based stocks.
Setting up research wings in the merchant banks is the demand of the hour to make the investors investment safe as the market size is expanding, experts said adding it is quite difficult to tackle the rumour-based investment.
"In a good number of cases, we've observed that share price movement is driven by rumours, but not by fundamentals," said chief executive officer of the Dhaka Stock Exchange (DSE) Salahuddin Ahmed Khan told the FE.
Accordingly, in most of the cases, the investors are suffering from undesirable losses, he added.
About two months back, the awareness building programme has been launched by some merchant banks like IDLC Finance Limited at the call of the Securities and Exchange Commission (SEC).
But this initiative leaves visibly no impact on the stock markets as the investments made by the investors, particularly retailers, on the basis of rumour.
Referring to neighbouring countries like India and Pakistan, capital market expert Moin Al Kashem said, setting up research cells in merchant banks are needed for making their clients investment safe.
"It is quite difficult to kill the source of rumour," he added.
A stock broker said rumour and speculation are the part and parcel of the stock markets, but their magnitude is a bit high in the country's stock markets as most of the investors, particularly retailers, are prone to rumour because of their poor knowledge about stock markets.
Not being afraid of rumour-based investment, Chandan Mondal, a small investor said: "Always remain in touch with the market, if you want to make quick gain. No matter your investment is driven by rumour or speculation."
Earlier, the SEC warned that it would take stern actions against the rumour mongers.
Apparently being worried about the rumour based investment, SEC chairman Faruq Ahmad Siddiqi last month in a function said knowledge-based investment is imperative in order to reduce the risk and bring stability in the capital market as well.
"Pick up scrip after analysing the company's financial condition, but don't take decision based on rumour and by listening to others," he added.
Echoing SEC chief in a same function economist Abu Ahmed said before investing on any scrip, the investors should know its market shares, mode of doing business and above all the track record of the sponsor directors of the company concerned.
Finance Adviser Mirza Azizul Islam recently said in a seminar: "Many investors are not conversant with the capital market as they are void of proper knowledge about the stock markets and companies."
They should make investment taking into account fundamentals of the companies, he added.
Rumour-based investment rules the roost of the stock markets, putting cap on efforts made by the securities regulators to make the investors aware about how to choose the fundamental-based stocks.
Setting up research wings in the merchant banks is the demand of the hour to make the investors investment safe as the market size is expanding, experts said adding it is quite difficult to tackle the rumour-based investment.
"In a good number of cases, we've observed that share price movement is driven by rumours, but not by fundamentals," said chief executive officer of the Dhaka Stock Exchange (DSE) Salahuddin Ahmed Khan told the FE.
Accordingly, in most of the cases, the investors are suffering from undesirable losses, he added.
About two months back, the awareness building programme has been launched by some merchant banks like IDLC Finance Limited at the call of the Securities and Exchange Commission (SEC).
But this initiative leaves visibly no impact on the stock markets as the investments made by the investors, particularly retailers, on the basis of rumour.
Referring to neighbouring countries like India and Pakistan, capital market expert Moin Al Kashem said, setting up research cells in merchant banks are needed for making their clients investment safe.
"It is quite difficult to kill the source of rumour," he added.
A stock broker said rumour and speculation are the part and parcel of the stock markets, but their magnitude is a bit high in the country's stock markets as most of the investors, particularly retailers, are prone to rumour because of their poor knowledge about stock markets.
Not being afraid of rumour-based investment, Chandan Mondal, a small investor said: "Always remain in touch with the market, if you want to make quick gain. No matter your investment is driven by rumour or speculation."
Earlier, the SEC warned that it would take stern actions against the rumour mongers.
Apparently being worried about the rumour based investment, SEC chairman Faruq Ahmad Siddiqi last month in a function said knowledge-based investment is imperative in order to reduce the risk and bring stability in the capital market as well.
"Pick up scrip after analysing the company's financial condition, but don't take decision based on rumour and by listening to others," he added.
Echoing SEC chief in a same function economist Abu Ahmed said before investing on any scrip, the investors should know its market shares, mode of doing business and above all the track record of the sponsor directors of the company concerned.
Finance Adviser Mirza Azizul Islam recently said in a seminar: "Many investors are not conversant with the capital market as they are void of proper knowledge about the stock markets and companies."
They should make investment taking into account fundamentals of the companies, he added.