Small investors' woes in capital market unlikely to end before national polls: Analysts

Small investors in the stock market are frustrated as their wait for a good time gets delayed by the country's ongoing political unrest.

The political impasse over who should oversee the upcoming national polls is thwarting the stock market's recovery from Covid-19 pandemic and the Ukraine-Russia war.

The small investors' shares are stuck on the floor price (minimum sale rate) and overall economic downfall. This has been painful for many unfortunate small investors of the capital markets, according to market analysts.

Policymakers and the Bangladesh Securities and Exchange Commission (BSEC) paint a rosy picture for small investors saying that stock markets will rebound with enlistment of new companies and injection of big investments. But the situation for the small investors seems to be hopeless.

A large number of shareholders have remained stuck with their investment in the capital market for over a decade amid fading hopes.

"No one, not even the regulator or stock market authorities pay heed to their screams," Abdul Latif, a grocery owner and one of the affected investors, told UNB in a broken voice. He said he invested Tk13 lakh in 2011 to buy shares of different companies listed in Dhaka Stock Exchange (DSE).

After graduation in 1998 Latif found no suitable job and then started a small business in the Motjheel area in 2002 with support from his father-in-law. He made a good profit in the business and invested money in the share market.

In 2010 Latif invested around Tk13 lakh of which 5 lakh was his own and 8 lakh borrowed from relatives. All of his investment was stuck in shares of different companies due to a big scam in the capital market in 2011.

Like Latif, thousands of investors lost their hard-earned capital in 2011, and after that, some were able to gain part of the capita. But most of them left the capital market losing nearly all investment.

Many of such investors are still in the market hoping for a rebound in the DSE, but without any good news.

There is no sign of lifting the floor price before the next election. However, economists say that people do not have confidence in the market. BSEC advises investors to be patient until the general election is held by January next.

Dr ABM Mirza Azizul Islam, an economist and a former adviser of a caretaker government, told UNB that there has been a crisis in investors' confidence in the stock market for a long time.

"To this are added various economic crises, the international situation, and everything including elections and national politics," he said.

As a result, first of all, steps should be taken to eliminate the trust crisis. In this case, trust should be ensured by establishing good governance, he said.

That is, the investors have to be given the assurance that if someone steals their money through manipulation, they will be prosecuted. Besides, the supply of good shares should be increased. Through these two steps, it is possible to eliminate the market problem. But it is not easy at all, said Dr Azizul Islam.

Dr Abu Ahmed, former professor of Dhaka University's Economics Department, said there are two crises in the market: one on the demand side and the other in investor confidence.

On the supply side, the problem is that there are fewer good companies. As a result, it is a win-win situation for manipulation and syndicates, he said.

All in all, the stock market is currently in an unstable condition and gradually the situation is getting worse. The passage from here is very difficult, he said.

According to market insiders, the stock market situation is in a dire. The situation is not improving due to political uncertainty ahead of national elections, increases in commodity prices, and various international issues.

The market has lost its importance to the government as well. For those who are not directly involved with government policymakers, the stock market is a source of irritation.

Their thinking is like this - if there is no stock market, there will be no problem in the country. For these reasons, the government wants to hold the market with floor prices until the next national election. This brings an opportunity for syndicates blessed by the regulatory body to be controlling the market, the market insiders said. They spoke on condition of anonymity.

BSEC Chairman Professor Shibli Rubayat Ul Islam told UNB in this regard that the global situation is not in the hands of the regulator or the government. Investors should beware of investing with any company depending on rumours.

He also said due to a lack of financial literacy, people are sometimes investing in weak shares with an expectation of big profit which is not the right way of investment.