After the stock market crash, in 2011 the government came up with some instant market support initiatives.
Among the initiatives, injecting Tk5,000 crore through a new collective investment scheme called the Bangladesh Fund was a significant step.
The fund, handled by the state owned Investment Corporation (ICB), managed to pull around Tk 1,800 crore mainly from other financial entities.
But as the stock market even after eight years of a fragile journey failed to get a strong foothold, the support fund itself sank into losses.
As of September 30, the Bangladesh Fund has been burdened with an unrealized loss of Tk500 crore.
It seems the support fund neither helped itself, nor succeeded in being an example of a market revival force.
The stock market is stuck well below the expected level. The main index of the Dhaka Stock Exchange (DSE) began to decline from a near 9,000 mark in December 2019.
Following some interim hikes the market has been down again for last two years and the core index is hovering around 4,700 with intimations of a further slide.
It is not only the support fund. Additionally, the government has come up with various incentives, financial as well as policy-related, in the last eight years.
The most discussed measure concerned supporting affected small investors through soft loans and exempting them from paying interest against margin loans.
With its political commitment to help increase affected small investors' resilience, the government through Bangladesh Bank provided them with Tk900 crore to buy additional shares in order to bring their costs down.
But very few of them could manage to come out of their predicament because of the market fall.
However, the scheme had a successful end point as the ICB, as the refinancing scheme's operator, refunded the amount back to Bangladesh Bank.
But the question of how much the incentives and support helped the market and investors remains relevant.
Years of a consecutive fall of the market have further intensified the debate.
The incentive debate
With market mechanism --the balance between demand and supply-- being inadequate in keeping a market stable, governments across the world tend to come up with support. That takes place through both fund injection and various policy incentives.
After the 2010 crash in the stock market, the government of Bangladesh too has come up with various steps, most of which were fund injection and some were policy measures that strengthened significant investors' pockets.
But nothing worked to keep the stock market on track as it is hovering way below the expected level.
In 2019, the question, "Do incentives work in helping a stock market keep on track?" is being loudly pronounced.
Finance Minister AHM Mustafa Kamal too has argued against market support through fund injections.
"Yes, it works all over the world. At least incentives help prevent further damage and in Bangladesh too fund injections and some other policy measures have helped the market rebound after a 60 percent correction," opined Md Fayekuzzaman, a market professional who served the Investment Corporation of Bangladesh (ICB) for long before retiring from the position of Managing Director a few years ago.
After the 1996 crash, there was no government support. The main index of the Dhaka Stock Exchange fell by over 70 percent. However, the last time government support helped arrest the fall sooner, he argued.
The question, though, is why the market is at a three-year low.
Md Fayekuzzaman too agrees with other experts that a lack of confidence among investors is what has led to a situation where prices are not sustained once the support fund is exhausted.
Md Abul Hossain, his successor at the ICB, too discussed the same problem last October at a meeting with capital market stakeholders.
Besides the Bangladesh Fund and affected small investors' schemes, the government at almost every fragile curve in the market has been coming up with some support. Each of these steps was meant to increase market liquidity and investors' confidence as well.
The government and Bangladesh Bank have continued to equip the ICB with short mid and long term funds as market support.
"Liquidity driven rallies are not sustainable. If you see that liquidity is withdrawn, you must be ready to see another fall until you ensure significant improvement in the fundamental scenario along with holistic good governance. Investors need assurances that buying and holding stocks will not hurt them, said Rakibur Rahman, a Director of the DSE.
Compliance, good governance and investor friendly operations at every stage are a must to reassure investors, he noted.
He has suggested a higher fund injection through soft loans to diversified market intermediaries.
In the last two years there have been lots of special exemptions intended to increase fund flow to the stock market.
In 2018, DSE members got an exemption from paying a capital gains tax on DSE's share sale to a Chinese consortium on condition of investing the entire money in stocks for three years.
A majority of the DSE members, opting for the tax incentive, have been frustrated at counting losses. Stock brokers who did not avail the exemption and stayed away from stocks are much happier as they have not been counting losses in their investments.
This year, Bangladesh Bank offered short term soft loans to commercial banks for stock investment, but as market confidence is low, the banks barely responded to the offer.
The ICB received over Tk1,500 crore in the last quarter of 2018 from special bonds aimed at shoring up stock market support.
This year too, it has received nearly Tk1000 crore for the same purpose.
Meanwhile, market intermediaries are also seeking large soft loans to put into stocks in a display of additional strength.