Forma # 1.ai - ICAB

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that the investor holds his share to the record date of dividend entitlement). But some investors do not know what is dividend; some think they will get dividend on Taka 500 i.e. Taka 100 and some really know their dividend would be Taka 20. If investing Taka 500 we get Taka 20 annually from the capital market why should we not go to money market where return on investment would be around 10% to12 % and there will be no risk factors of losing capital and income? The purpose of business is not only making profit but also maximization of wealth by creating net assets value year after year. Investing in the capital market, investors may get chance of making profit and maximization of his wealth value which is not possible in money market. But should we buy wealth of Taka 300 for Taka 500?. And if we buy, would we be able to get pay back of our investment within 3 or 4 days or even in one year ? If it is not possible by analyzing the growth trend of investee company then question may come why should we buy share with taka 500? In this case, either we should wait till the value of investment has grown above Taka 500 or we should find another investment opportunity. So if an investor wants to have a decent return on his investment (expecting dividend) for short term and to maximize the value of his equity then capital market is the perfect place for such investor. So before coming into capital market, investors’ decisions should be taken for long term with a view to maximize the value of their wealth and not for making profit overnight. Investor in the capital market should also consider the following risks The market risk defines the overall risk involved in the capital market investments. The stock market rises and falls depending on a number of issues. The collective view of the investors to invest in a particular stock or bond plays a significant role in the stock market rise and fall. Even if the company is going through a bad phase, the stock price may go up due to a rising stock market. While conversely, the stock price may fall because the market is not steady even if the investee company is doing well. Hence, these are the market risks that the stocks investors generally face. The industry risk affects all the companies of a certain industry. Hence the stocks within an industry fall under the same industry risk. The regulatory risk may affect the investors if the investee company comes under the obligation of government implemented new regulations and laws. The business risk may affect the investors if the company goes through some convulsion depending on management, strategies, market share and labor force. Systematic Risks The risk inherent to the entire market or entire market segment. Also known as "un-diversifiable risk" or "market risk Investopedia explains Systematic Risk Interest rates, recession and wars all represent sources of systematic risk because they affect the entire market and cannot be avoided through diversification. Whereas this type of risk affects a broad range of securities, unsystematic risk affects a very specific group of securities or an ndividual security. Systematic risk can be mitigated only by being hedged. Even a portfolio of well-diversified assets cannot escape all risks. Conclusion It is capital market intermediaries who have to take firsthand responsibility for evolving our capital market. As capital market is one of the important contributors to growth of our GDP, this market should be a place of profitability, sustainability, viability and confidence and trust for investors. Investors’ maturity, reaction and prudence are also vital to have sound capital market. If we consider the above factors of capital market risks before taking investment decision, a chunk amount of risk can be mitigated. We should bear in mind that this is not the place to rush to make money overnight rather it is the place where slow and steady wins the race. The Author is a Member of <strong>ICAB</strong> & Manager (Account & Finance) M. M. Ispaahani Ltd., Chittagong 44 January - March 2011 The Bangladesh Accountant
Capital Market Review Volatility in the Bangladesh Stock market: Regulators step in to bring back investors’ confidence The country’s premier bourse Dhaka Stock Exchange (DSE) began the first trading day of 2011 on January 2, 2011 against the backdrop of a record single-day fall in share prices and a persistent liquidity shortage. Although the general index of DSE (DGEN) had soared by 82% in 2010, the first week of the New Year was marked by volatility and violent protests by investors. DGEN rose by 14.18 points on January 2 but, the index has plunged by 569 points over the next four trading days and a whopping 213 points on January 6. The second week of the year gave even a bigger shock to the investors when DSE suffered the steepest ever single-day fall in the bourse's history on January 9, 2011. DGEN plunged by 600 points, and all indices fell nearly 8% amid panic-sale. Securities and Exchange Commission (SEC) and DSE authorities had to suspend trading at 11.50 a.m. when DGEN shed 660 points or 9.25% between 11 am and 11.50 am. Dhaka stocks bounced back on January 11, 2011 when DGEN rose more than 15% - the highest one-day spike ever - rebounding a day after a record plunge sparked violent protests nationwide and prompted a flurry of market-boosters from the authorities. DGEN gained 1,012.65 points to close at 7,512. 243 issues, out of 248 securities, advanced massively because of the investors buying frenzy when 195 issues hit the upper band of their respective circuit breakers, forcing automatic freeze on their transaction. And there were no sellers for most of the stocks. Dhaka stocks opened the third week on January 16, 2011, with a positive note, but soon nose-dived amid volatility, after record plunge and rebound in the previous week. Out of the total of 247 issues traded on the DSE, 215 declined and 32 advanced. SEC suspended trading of both the bourses again on January 18, 2011 for the second time within eight days due to free fall of share prices. DSE had lost 600 points in five minutes of trading on January 20, 2011. Thousands of aggrieved investors in Dhaka and elsewhere in the country took to the street to protest the collapse of the stock market and fought pitched battles with police as most of the investors had lost more than 50% of their capital in the collapse. DGEN lost a massive 1249.54 points, or 16.49%, the highest ever in a week, as panic-stricken investors went for heavy selling, in most cases offloading their entire stocks, following liquidity crisis in the capital market. The Securities and Exchange Commission (SEC)—the capital market regulator—suspended trading for January 23-24, 2011, as per the directive of the government, while finance minister Muhith held a series of meetings with stakeholders on January 23 to stem the massive slides in share prices in the previous weeks. The government’s intervention in the capital market in the last week of the month kept the Dhaka stocks afloat as the premier burse’s general index showed an upward trend ending two weeks of The Bangladesh Accountant January - March 2011 45
Page 1: The Bangladesh Accountant January-M
Page 4 and 5: EDIT ORIAL The Perspective Plan and
Page 6 and 7: management and communication. There
Page 8 and 9: Uniform Accounting a must for Energ
Page 10 and 11: Management Accountants, Auditors ha
Page 12 and 13: A delegation of the Institute of Ch
Page 15 and 16: Bangladesh Capital Market Opportuni
Page 17 and 18: Budget for the sake of so called ec
Page 19 and 20: 8.Capital gain: The capital gain ma
Page 21 and 22: Avoiding Losses in the Share Market
Page 23 and 24: putting up anything-or very little.
Page 25 and 26: Table 11: Major Indicators related
Page 27 and 28: ) Huge inflow of new investors in t
Page 29 and 30: On one occasion, those who hold the
Page 31 and 32: It is widely accepted that the curr
Page 33 and 34: Figure 17: Overseas Migraon from Ba
Page 35 and 36: Source: BMET. Figure 18: Market Spe
Page 37 and 38: • Government should continue the
Page 39 and 40: These relative developments among t
Page 41 and 42: management which often readjusts th
Page 43 and 44: Fundamentals to Safeguard Investmen
Page 45: come in stock market to make profit
Page 49: current crisis in the capital marke
Page 52 and 53: “The stock market is but a mirror
Page 54 and 55: “The stock market is filled with
Page 56 and 57: “Oh, for the good old days when p
Page 58 and 59: everything eventually boil down to
Page 60 and 61: Number of Qualified Accountants wor
Page 62 and 63: espect, the Ministry of Finance, In
Page 64 and 65: ody in the social development secto
Page 67 and 68: Opportunities and Challenges for Ad
Page 69 and 70: at cost less any accumulated amorti
Page 71 and 72: Students’ Section Sanjida Kasem F
Page 73 and 74: 13. Take breaks: Do not study at a
Page 75 and 76: Students’ Section Subject Duratio
Page 77 and 78: Students’ Section 10. The student
Page 79 and 80: Students’ Section 1/15/ICAB-2010
Page 81 and 82: Be better informed! - Subscribe to

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