Syed Golam Shahjarul Alam
A thesis submitted in partial fulfillment of the requirements for the degree of Professional Master in Banking and Finance
Dr. Sundar Venkatesh (Chairperson) Dr. Winai Wongsurawat Dr. Yuosre Badir
Nationality: Previous Degree:
Bangladeshi Master of Business Administration University of Dhaka Dhaka, Bangladesh Bangladesh Bank (Central Bank of Bangladesh)
Asian Institute of Technology School of Management Thailand May2012
ACKNOWLEDGEMENTS My greatest Gratitude is given to Dr. Sundar Venkatesh, my project advisor, for his deep insight in capital market, which helped me to accomplish the project paper. His dedication towards teaching, motivating and supervising influenced me greatly, leading to do my project work carefully and seriously. I wish to express my deepest gratitude and appreciation to Bangladesh Bank, My office, for granting me a scholarship, to pursue my Masters in banking and finance. I express my gratitude and deepest appreciation to my friend Ms. Senjuti binte rafiq, My Colleagues in Bangladesh Bank and DSE Library staffs who helped me by providing valuable suggestions and necessary data for my analysis. I am very much thankful to Dr. Winai Wongsurawat and Dr. Juthathip Jongwanich for their valuable suggestions regarding my project. I express my gratitude and deepest appreciation to Ms Kluaymai Thongkham, Ms. Farah Nashid Hossain and other AIT staffs for their effort in creating a homely atmosphere amid the difficult time.
ABSTRACT The Capital Market of Bangladesh is passing tough times since December 2010 as high volatility is eroding the capital of Thousands of Investors that might turn into social instability. This fall is caused by many factors that I tried to identify and tried to link up between causal factors of market crash and regulatory failure. Primary issue related problems was faulty listing methods and IPO overpricing, few numbers of new listings, revaluating assets before company listing, high premium in issuance of right share/Repeat IPO etc. while secondary market related problems was stock splits and stock price manipulations through block trading, circular trading and insider trading. Investor’s greed and irrational behavior played a big rule to make the stock prices sky rocking as they were crazy to buy shares without judging the company fundamentals. Shares of the companies with closed operations and big accumulated losses were rising constantly due to investors high risk appetite that caused them to loss everything. Government had already taken many steps (including SEC reforms) to stabilize the market but failed as investors confidence is in the bottom level. Government and regulators should work together to identify the main speculators and should brought under proper trial to bring investors back to the market. Regulator should make reforms on Listing procedures and other faulty regulatory frameworks to ensure transparency and efficiency in the capital market and also should bring clear guidelines regarding Private Placements, Asset Revaluation, Insider Trading, Dealing with Omnibus Accounts etc.
TABLE OF CONTENTS CHAPTER TITLE Title Page Acknowledgements Abstract Table of Contents List of Tables List of Figures List of Illustrations 1 Introduction 1.1 Background 1.2 Statement of the problems 1.3 Objectives 1.3.1 Overall Objective 1.3.2 Specific Objectives 1.4 Scope Literature Review 2.1 Terminology 2.2 Previous research works on this topic Methodology 3.1 Data Source 3.2 Methods Recent Trends of Capital Market PAGE i ii iii iv vi vii viii 1 1 1 2 2 2 2 3 3 10 14 14 14 15
5 6 7 8
Factors behind recent Capital market Crash in Bangladesh Conclusions and Recommendations Bibliography/References Appendixes
22 35 39 40
LIST OF FIGURES FIGURE 2.1 2.2 2.3 5.2...