Slipping a Bit Too Much

The Dhaka Stock Exchange continues to slide and slide and this worries me. The market was up and running with great momentum in 2007, but now it is almost coming to a standstill. Standstill may still be an euphemism.

I had predicted this scenario a little while earlier here. But I did not think it would be this bad. What's causing this exodus from the stock market?

Economic reality settling in
We knew the economy was in for a tough time because of the food crisis, arrests and political changes. But it usually takes some time for the economic effect to appear in everyday lives. We should brace ourselves for what we merely heard as rumors as the effects are now in action.

On the right is the DSE Index for the last 30 days. I couldn't find the graph for the last 6 months because it would be too horrific and R rated for the DSE to publish.

Grameenphone's sham IPO
I will discuss why it is a sham a little later (still writing it up). But people are really hoping that they will be getting miracles out of this scenario. GP submitting their proposal to the SEC got the whole market bullish for 1 day. But then it continued to slide. (Maybe because people already figured out it was a sham)

Bank Fixed Deposit Rates
Now bank deposit rates are just shy of 15%. That means without doing anything you are getting 15% on the spot for your money, without any risks or worries. This is creeping out to be a contender for stock investments. The FDR rates will continue to rise as banks are reluctant to give loans and while they still think they are in a liquidity crisis.

Fall of AB Bank Foundation
Documented here. It still turns out they provided a large amount of credit/loan for each stock investment. For some time they got away with it, but then they got fined because they loaned too much. AB Bank Foundation were also involved in getting a piece of the lucrative pie. It turns out that they could also manipulate the stock by mass scale buying and selling. Again, AB Bank may not be much of a bank, but their Foundation beating all foundations out there. So 2008 Foundation of the year goes to AB Bank. A foundation that wasn't a drain to AB Bank, but actually managed to give something in return to AB Bank.

Picture on the right is a little funny. It is the signing ceremony where AB Bank would handle the securities of Trust Bank. Read the sign board in the background ; )

US Economic worries
The largest economic entity is in trouble and you think Bangladesh will be spared? Due to the wonders of globalization, when someone goes down the entire world is in the dumps.