Problems and remedial

The share markets of Bangladesh recently witnessed wild volatility. Recent experience has made us believe that anything can happen in our capital market. Most of the investors lost up to 60 percent of their capital. At present government steps merchant and mutual funds must play the vital role in achieving a stable market. Dhaka stock exchange:

Dhaka stock exchange is the main stock exchange in Bangladesh. It is located in Motijheel at the heart of Dhaka city. It was in corporate in 1954. Dhaka stock exchange is the first stock exchange of the country. As of 18 August 2010, the Dhaka stock exchange had over 750 listed companies with a combined market capitalization of $50.28 billion.

Share:

 In plain and simple, share is the ownership of a company. Share represents a claim in the company's assets and earnings. As you acquire more shares your ownership stake in the company becomes greater. Whether you say shares, equity, it all means the same thing. A company could keep the profits and earnings for the owners of the company. In order to extend market share or get bigger asset, at some point every company needs to raise money. To do so companies can either borrow it from somebody or raise it by selling part of the company, which is known as issuing share. The first sale of share by a company is called the initial public offering.

Risk involvement in a share

 This is a very important factor you believe in risk when you want to invest in the share market. There is no guarantee of what percentage of capital gain you can get, where and when the share price stops in up end or low end and how long it takes to get the profits. It is true no company or institute can guarantee. However you can measure the risk in various ways. That's why it is essential to do some home work on a company before you invest. The home work should be calculating earnings per share, total debt, relative price strength, profits margins, volumes, industry leader and so on. You can also reduce the risk by diversifying the correlation between a share and a market index. A less risk taker has options to invest in board or a company that provides dividends at the end of year. However, investors need to measures first and it should be high enough to compensate the investors for the perceived risk of the investment. Risk is contrary to the positive profit but there is also bright side. Talking on greater risk demands a greater return on the investment.

How share trade

Most shares are traded on exchange which is places where buyers and sellers meet and decide on a price. Some exchanges are physical locations where transactions are carried out on a trading floor. Two trading floor are located in Bangladesh, DSE which is located in Dhaka, cse is located in Chittagong. We should distinguish between the primary and secondary market. The primary market is the first phase of share where securities created before trading at floor which is called IPO. In the secondary market investors trade previously issued securities without the involvement of the issuing companies. The secondary market is what people are referring to when they talk about the share market.

What causes price to chance: share prices change because of supply and demand. Any single time if more people want to buy a share than sell it then the price move up. Conversely if more people want to sell a share than buy it, which is a greater supply than demand then the price falls. On Wall Street the bulls and bears are in constant struggle. A bull market is when everything in the economy is great people are finding jobs,GDP is growing and share prices are rising. Things are just plain rosy, picking shares during a bull market is easier because everything is growing up. Bull market can't last forever though and sometimes they can lead to dangerous situations if shares become overvalued. If a person is optimistic believing that shares will go up he or she is called a bull and said to have a bullish outlook. A bear market is when the economy is bad recession is looming and share prices are falling.

Present situation of share market

Our share market experienced a totally new kind of development in the trading. It watched both sides of a coin within two trading days. On January 10,2011 we saw a huge selling pressure and a record fall 600 points in the general index of Dhaka stock exchange within just 50 minutes of trading. Again next day we find the other side of the coin when almost no seller was found in case of most of the shares. The den which was 5367.11 points on January 10, 2010, increased 6249.35 on the same date this year. But in a days gap market index soared to 7512.09. The percentage change in one year stood at 39.9 from 16.40 within two consecutive trading days. In 2010 institutional investors especially some banks and non bank financial institutions showed their investment characteristics like general investors. Over last two years the profit of most of the bank and financial institutions became two or three times more than that of the previous years. This profit growth was attributed to profit earned form investment in shares. Thus many banks and financial institutions concentrated on share business instead of investing in their core banking activities. In early December 2010 when general index reached the record 8700 points many analysis expressed their concern about the overvaluation and syndicate price hike. But that time our general investors were over inspired by the gain from the market. It was seen that most regulatory devotions failed to show down the unending market rally. In vesting people became more dependent on rumors than fundamentals of the issue traded on the bounders-es. Insider traders turned out to be big gainers. Now it is becoming clear to us that there are many other factors that have bought the capital market on the verge of a collapse. Many of us started blaming the regulators. It is a matter of great regret that the sec the central bank and other shares holders are also blaming to each other. This ultimately proves the lack of coordination among them in policy making and policy implementation.