Problems of Stock Exchange in Bangladesh
Bangladesh is an agro-based economic country. Our country is not economically strong and industrially developed. GDP and per capita income are also very low here. Most of our people are illiterate and they are not aware to invest in the stock exchange. For a variety of reasons, stock exchanges are not functioning well. Some of the reasons are as follows:
Low per capita income: Our per capita income is much lower. For this reason, cannot come from our agro-hawed sectors to invest in the stock exchange. So investment is lower on the stock exchange and is not performing well.
The lower rate of dividend: Companies in our country often declare the lower rate of dividend per share that create a negative impression in the public regarding stock exchange and the companies. The companies provide low dividend on the share that’s investors are reluctant to invest in the stock exchange.
Low savings: Due to low income and lack of awareness, savings is not substantial. Besides we are a very ravenous nation. We like to consume currently. Because of such problems we can save little that is not enough to invest in stock market.
Lack of awareness: Most of our population is illiterate. They live from hand-to-most. How could they be aware of share market? Our whole society is not aware of investing in the securities market. Many educated people are not aware of the stock exchange, though they have enough savings.
Lack of institutional investment: Institutional investors constitute a huge part of the stock market. But the tendency of such institutional investors is not always positive toward the stock exchange. But if they would invest more in individual investors, the stock exchange could supply a huge capital to the industries.
Lack of loan facilities: Commercial banks are not willing to disburse much loan for investing in stock market and even they give a limited amount of loan that is not enough to form a substantial amount for capital required in industrial sectors.
Few registered companies: The number of reregistered or public limited companies is not enough in our country those who are in the stock market. Not having enough companies, the stock market is also failing to draw the attention of general mass. If the govt policy is friendly the more and more companies can be formed and the capital flow in stock exchange could be healthy.
Speculation and manipulation: Some clever traders or share market deceit the tender investors and gain more from the stock market. They make the artificial shortage of stocks and leave the price level high and sell their shares at the higher price. Again the lower the price and buy the huge number of shares. By their speculative power, they always collect more profit from stock market where the individual investors lose the profit.
Management inefficiency: Management of the stock market is not efficient enough. Here the rules and regulations are not followed strictly and the management is unable to do so. It also unable to make the timely decision that hampers the usual activities of companies as well as the investors. For having such efficiency stock exchanges are not doing well for the economy.
Political unrest: Political situation in our country is not peaceful. It always creates turbulent and conflicting. So, political activities, procession, strike etc. hamper the usual activities of the companies. The investment of home and abroad can be withdrawn. In the bad cycle goes to stock market and the investors are unwilling to invest anymore even withdraw capital from stock market which creates huge problem in the stock market and the companies.
Lack of available information: Information flow in our country is not free. How many companies are there, which one is profitable, which is not functioning well, which sectors are going to flourish etc. inhumation is not available in the country. Because of lacking in technology, people are not getting information properly that affect the investment in the stock exchange.
Insufficient Industrialization: Our country is not industrially developed. Without enough industry, it is very difficult to create a strong economic base. Our economy does not produce much so that we can fight in the foreign market. Lack of industrialization ultimately creates the vulnerable condition in investment level thus weakening the stock market.
Because of these reasons stock exchanges in Bangladesh are not functioning well. To overcome those problems the govt. should take proper steps for developing the stock market and the companies also.