As Bangladesh stock market soars, experts advise caution to investors

As Bangladesh’s capital market indices shatter records almost every day and the buzz is back after years, experts have advised investors against jumping the gun and to plan carefully before perking their money on securities.

On Tuesday, the benchmark DSEX at Dhaka Stock Exchange shattered a six-year record and settled at Tk 20.68 billion worth of transactions.

The market index also tore past the 10,000 mark.

The market euphoria has spread among the public with enthusiastic investors queuing up in the hope to make the most of the bounty days.

As brokerage houses are suddenly getting a lot of visits, experts have cautioned that investors should not get carried away by the boom.

One of the keen market watchers is former finance advisor to the caretaker government AB Mirza Azizul Islam.

He cautioned, "I have information that once again many people are selling off their land or borrowing money to invest in the share market. This is absolutely not the right thing to do."

Speaking to bdnews24.com, he said he is afraid the people, after losing their all to invest in stocks, might end up losing everything, yet again.

Former chairman of Bangladesh Securities and Exchange Commission (SEC) Farooq Ahmed Siddiqui told bdnews24.com, "It is not wise for those who do not understand the stock market to invest in it."

Former Dhaka Stock Market President Rakibur Rahman advised prospective investors to remember the prime minister's words - understand carefully and then put their money in. 

He was alluding to a recent reminder by Prime Minister Sheikh Hasina when she cautioned hasty investors, “Do not buy any and every bit of information. One ends up making an investment, then losing everything and then crying that the fault is of the government, the fault is of the finance minister. That should not happen."

The caution from all of them follows from two bitter incidents of the past.

In 2010, investors were in for a rude shock following the market bust preceded by a boom, much like 1996.

The crash led thousands to lose everything they had, which they had frantically gambled on. The commercial hub of the capital, Motijheel, was paralysed for months on end with angry investors demanding government measures.

Though several steps were taken by the government, small investors continued to remain unhappy as no measure taken by the government seemed enough to arrest market slide.

However, the transactions over the month so far are showing encouraging signs.

In fact, the transaction topped Tk 20 billion after six long years.

Under fire from retail investors for quite sometime, Finance Minister AMA Muhith is upbeat about the market surge.

He said the market is expected to do better in the days to come.

Just prior to the market collapsing in 2010, the DSE index had soared past 9000 dizzying points while the transaction figures had shot past the Tk 30 billion mark.

For now, brokerage houses in Motijheel are greeting euphoric traders.

Parvez Ahmed, an investor coming out of a brokerage house at the close of Tuesday's trading, told bdnews24.com, "It's quite good now.

“The market has emerged out of the 2010 collapse. It's been a month and has made good profits."