Just when they thought it was then safe to go back to the stock market after the December 2010 debacle, many investors regained their comfort level only to take another hit.
They have not had anticipated another steep slide so soon after losing more than half of their investments in the biggest fall in 2011, the year of bubble and bust.
“I put Tk20m on stocks after the market collapse in 2011, but it now stands at Tk2m only,” said Abul Kashem, who gave up his private job in 2007 for the stock business.
“I went back to the market with a hope that the losses could be recovered, aided by moves taken by the regulators and bankers,” he said, referring to the creation of a big fund by bankers initiated by the Investment Corporation of Bangladesh (ICB). “But many moves have not seen yet daylight, only eaten up my investment.”
After the market bottomed in February 2012,the benchmark index DGEN climbed around 30% as of April 23, 2012. Now the DGEN has come down below the 4000-mark — the level seen in early 2012 for a brief period.
Jittered by fresh losses, investors began to pull out of the market, making turnover value slump merely at around Tk1.5 bn — the figure not seen even in the big collapse of 2011.
“After the biggest fall in 2011, the more I invested, the more I sustained losses,” said Mohammad Lutfur Rahman, a retailer.
“Taking loan from my near and dear ones, I invested in the stocks, but now I am at a loss,” said Rahman, whose initial investment was Tk1.5m. “All my investment has vanished. I am bankrupt now,” he said.
Rahman has now joined a private firm, losing hope in the market.
But another retailer, Enamullah, was not lucky enough to manage a job like Rahman. He was forced to go back to his village after losing everything.
“All of my investment evaporated. I am loaded with loan from my relatives,” said Enamullah, who left his job in 2011 for the stock business. “My family depends on me. I am undone. A job is a crying need right now.”
Kashem, Lutfur and Enamullah were among many investors who felt the pain of their investments that crushed under the wheels of tumbling stocks.
Over the last two years, the government and Bangladesh Securities and Exchange Commission (BSEC) have adopted a raft of measures, including compensation packages for the retail investors, which have not been implemented yet.
The BSEC has brought a number of changes in the norms and issued directives to bring investors’ confidence back from the brink, but did not work.
The BSEC issued directives to Dhaka Stock Exchange to generate a buying binge in the bearish market, asking sponsors, directors and promoters of all listed companies to hold at least two percent stakes individually, and jointly hold a 30% stake in their own companies.
They restored some vigour, and many investors kept their money in stocks, hoping to recoup their losses and get ahead.
Another directive that put margin call on hold until September 2013 fell flat.
Investors and traders, large and small, who still bear the nightmare of the 2011 market collapse, are stubbornly avoiding the market now.
But this time the market is mainly being hit by the ongoing political standoff.
“The BSEC directives on minimum shareholding and assurance of formation of a big fund have now boomeranged because of political standoff,” said a fund manager, requesting not to be named. “These were short-term measures. Now the investors are paying the price."
It is necessary to put light on long-term issues for the sustainable development of the capital market, he said, adding that political chaos also needs to be sorted out.