WELCOMEPRESENTATION ON BANGLADESH SHARE MARKET CRASH
WE ARE- GROUP 5
SAYRA NUSRAT 02
MAHMUDA SULTANA 94
FATEMATUZ ZAHRA
SAQUI
99
WAHIDA MASHRURA
SHUKH
100
NASEEF- US SAKIB 110
OUR AGENDA• CENTRAL IDEA• ANALYSIS OF THE ARTICLE• TO AGREE OR NOT TO AGREE• IMPORTANCE OF MARKET
STABILTIY • FUTURE OF STOCK EXCHANGE
CENTRAL IDEA-Bangladesh Stock Market
• Platforms for raising fund• Intermediary role between SBU and DBU• Considered more liquid than any other investment choice• Wasn’t affected by global recession 2007-2008• Since 2007, stock prices started increasing• Lured investors with small savings and small to no knowledge about market • Market crashed in 2011
TIME LINE OF STOCK MARKET CRASH
TIME LINE OF STOCK MARKET CRASH
DGEN gained its all-time
highest 8, 918.51 point
whose market value was
36.8 billion taka3/12/20104/12/20105/12/2010 6/12/20107/12/20108/12/20109/12/201010/12/2010 13/12/2010 14/12/2010 15/12/2010 18/12/2010 19/12/2010 20/12/2010 21/12/2010 7/1/2011 8/1/2011 9/1/2011 10/1/2011 11/1/2011 12/1/2011 18/1/2011 19/1/2011 20/1/201125/1/201110/2/201112/2/201113/2/201114/2/201115/2/201116/2/201117/2/201118/2/201119/2/2011
THE ARTICLE
ARTICLE TITLE: Share Market Crash And The Reasons Behind The DisasterPUBLISHED : Tuesday, 16 October 2012AUTHOR: Md Noor Solaiman Jewel, Senior Executive, the Premier Bank Limited (Brokerage Division), Chittagong
ANALYSIS OF THE ARTICLE
• Share market crash defined• Timeline of the crash history• Reasons behind the crash• Margin Call defined
• Similarity between 2011 and 1996 crash• Recommendation
ARTICLE ANALYSIS (CONT’D)• The biggest one day fall in the 55 year history of Bangladesh
stock market• Grameenphone’s market entry And price hike• Panic of small investors led to more losses• Fluctuation of DGEN throughout 2010• Liquidity crisis in the financial and non-financial institutions• Share market was overvalued
ARTICLE ANALYSIS (CONT’D)
Recommendation • Sponsor-directors' should hold 2% shares • Adoption of actual book-building process• Margin loan decision should be taken by
brokers• Insider trading should be strictly prohibited• SEC needs honest officials • Action must be taken against the responsible
parties• Improvement in security laws and penalty for
breaking those
TO AGREE OR NOT TO AGREE- OUR ARGUMENT
TO AGREE OR NOT TO AGREEReasons for share market crash
Agree/Disagree
Why
1. Role played by SEC, DSE and CSE
Agree
• Overvalued market• Heavy manipulation• Lack of proper investigation• Failing to monitor and control the
market• Computation of non-tradable
shares as tradable & creating loophole (directors’ share)
• Dishonest employees
2. Faulty IPO & asset valuation procedure
Agree
• Entrance of GrameenPhone hiked price up
• Pre IPO and Post IPO manipulation• Overvaluation of Assets• Issuance of Bonus shares against
unrealized gain of revalued asset price
Reasons for share market crash
Agree/Disagree
Why
3. Omnibus accounts of major market players
Agree
• Each omnibus account can have 3000 to 10000 BO accounts
• Are not under the surveillance of SEC
• Used in illegal and unethical transactions and causing price hike
5. Insider trading Agree• Creation of artificial active trading
environment
6. Margin call Agree • 10 times the average amounts
of margin calls for firms and it created liquidity crisis
TO AGREE OR NOT TO AGREE
TO AGREE OR NOT TO AGREEReasons for share market crash
Agree/Disagree
Why
1. Conservative monetary policy of Bangladesh Bank
Disagree
• Increased CRR by 0.5%• Restricted more than 10%
investment of deposited money in the share market for commercial banks
• Less like a reason and more like a consequence
• Double digit inflation• Real industry growth was
hamperedSome one had to take extreme measure sooner or later to control the market.
2. Trust issue of small investors
Disagree
• Trust is earned• Previous history of market bubble
creation and the fall• Analysts’ report about overvalue
market• Little or no knowledge about the
market
OUR ARGUMENT- Flaws in the DGEN Index
• Counted the index for IPO shares on the very first day though it didn’t show the real price• DSE did not follow the correct
method of index calculation while incorporating new securities under direct listing rules• Other technical errors regarding
right shares and bonus shares
IMPORTANCE OF SHARE MARKET STABILITY
• Investment facilitation• Exchange rate• Employment in the
private sector • Standard of living• Business operation• Liquidity
FUTURE OF STOCK EXCHANGE• Capital markets' growth as a whole
has been good • The only viable low cost option to
raise capital• Is in the right path with necessary
infrastructure• Has a huge number of investors• Government, regulatory bodies
and investors all has to play their parts to stop future similar incidence• Lessons can be learnt from other
stock exchange crash
THANK YOU