Capital Market

Is this a bubble in DSE like the world has seen time and again? is it going to be crushed soon? is there any way to save investors from the upcmoing crash?

I think we do not need to do anything to save investors from the 'upcoming' crash. It is a game of greed and fear. Those who are greedy will be punished and get their 'lesson'. That 'lesson' is invalueable for investors; not only for investors in Bangladesh market but also for investors around the world, across the time. In Bangladesh some people has got the 'lesson' in 1996. Those who have not quit after having the lesson, must have learned the stock business by now. I am sure they are making tons of money from this bull market.

May be I am sounding rude. But that is the rule of the game. A crash is a necessary thing for the development of the market. It is necessary for learning. When people make money from a rumour or from the tips of his broker, they are just happy. they dont analyze why they have been able to make this much money. They start analyzing when they actually lose it. They start to find out the reasons for loosing money. And that is when the learning process begins. And who does not know how necessary it is to have 'the investors knowledge' for any market. Every country, every capital market needs to renew this knowledge after a while. That is why crash was there since the inception of capital market. We can try to deffer that learning by different measures. But ultimately it will come. and it will come in a harder way. So why deffering the opportunity of learning!

Few Findings from Mr. Nasim Manzur's Column in Daily Star

Decoupling is a highly discussed issue in the global economy. What it actually means is disintegration between different economies around the world (Although it has other meaning in economics like disintegration between economic growth and growth in environmental hazards). As the global economy is going through a bad time now, everyone is talking about decoupled economy, the economy that is remained more or less unaffected due to global economic turmoil. These decoupled economies might give an opportunity for diversification of the portfolio of global investors. So during the bad time, at least some part of their portfolio would remain unaffected.

And consequently economy of Bangladesh comes into discussion. As Bangladeshi financial system was totally unrelated with the outside world financial system, local financial institutions are not feeling the heat of global turmoil. The major stock markets have lost around 40% of their value this year, whereas Dhaka Stock Exchange remained mostly unaffected (Around 2% drop this year). Oil price has gone down, which is very good news for Bangladesh, as we are an oil importing country. So it is all happy going for Bangladeshis. But today a column published in The Daily Star by Syed Nasim Manzur (MD of Apex Adelchi Footwear and a very good economic analyst. The link to the article is http://www.thedailystar.net/story.php?nid=58711) has caught hold my eye. He has pointed out few areas that challenge the entire concept of decoupling and also challenges the belief that Bangladesh is in an advantageous position. The main points that I found in his writing are:

- Recession in the west might create demand for lower priced goods. So the export sector might be affected due to price cut by the international buyers.
- As major foreign currencies becoming weaker against taka, the exporters will lose their competitive advantage.
- Oil price may hit the economy of Middle East, the major employer of Bangladeshi labor. So the labor export might slow down. So will be the flow of inward remittance.

So we are in no position to sit back and relax, watch the global economic turmoil with academic interest. We need to be as active as the other developed nation to combat the global slowdown.

GDP wise ranking of Bangladesh

I didn't know that GDP wise Bangladesh is the 58th largest economy of the world. According to world banks ranking, Bangladesh is ahead of Croatia, Qatar, Bulgaria and several other European economies. Although it is mostly because of very large population and GDP per capita is one of the lowest, it feels good to be 58th largest economy round the world. And GDP growth rate wise Bangladesh is ranked 67th according to CIA world fact book. The growth is much higher than most of the developed economies. And this fact is based on 2007 data. This year position is likely to be improved because the Bangladesh has remained mostly unaffected by the global financial turmoil. In fact when the world is busy for their survival, we are being lucky to remain in a corner where economy is showing no sign slowing up.

Intro

In Bangladesh we have few things to cheer about, very few things to take pride. Whenever I go through a newspaper I find it difficult to read. It is full of bad news. When I live in such frustrating environment, my confidence goes down. Sometime I think that I should leave this country. Some time I feel that no good thing will happen to this country. I get panicked……but only for a moment. I know that lot of good things are happening out there in Bangladesh. May be our media is not interested to show the positives, may be bad news sells well than good news. Whatever is the reason, I find more reasons to be optimistic about our country than our newspapers and electronic media find. This blog is mainly to keep a collection of these optimisms. Some time I forget those points. So whenever I would get frustrated, I wish to come back in this site and wish to get energized. My discussion will mainly revolve around the economy of the country, business environment, financial sector, investment opportunity. I am a very active investor in stock market. So stock market will come frequently in my writing. But I might write about some completely different things as well.