Share dearth may create bubble in stock market: Experts

Star Business Report

Analysts and businesses fear that there could a bubble in the capital market if there was no new supply of shares in near future.
They called upon the government to offload shares of its entities to avert a bubble-type situation.
“At present there is no bubble, but the situation can turn serious if there is no new immediate supply,” Rakibur Rahman, president of Dhaka Stock Exchange (DSE), told a post-budget discussion, organised by the Economic Reporters' Forum at the National Press Club.
A stock market bubble is a type of economic situation taking place in stock markets when prices of stocks rise and become overvalued by any measure of stock valuation.
Currently stock markets in Bangladesh are facing some sorts of bubble with hundreds of new investors entering the markets everyday. Regular trading at DSE is at around Tk 800 crore, which was even unthinkable a couple of years ago.
“Supply needs to be increased immediately,” said Muhammad A (Rumee) Ali, chairman of BRAC Bank and a former deputy governor of the Bangladesh Bank.
President of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) Annisul Huq and President of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Fazlul Hoque also echoed the same.
“There is a fear of repeating 1996 stock market collapse if the trends continue without new supply,” said Annisul Huq. “The government should offload shares of its entities,” he added.
The BKMEA president introduced the discussion on the over prices of stocks.
Awami League Presidium Member and lawmaker Tofail Ahmed attended the discussion as chief guest.
President of Real Estate & Housing Association of Bangladesh Tanveerul Haque Probal, President of Bangladesh Reconditioned Vehicle Importers and Dealers Association Abdul Haque and industrialist Syed Nasim Manzur also spoke.
The speakers hailed the government for expanding social safety net, introducing public-private partnership and reducing import duty of raw materials in the proposed budget for the next fiscal year.
But they expressed dissatisfaction at allowing investment of black money by paying a flat rate of 10 percent and poor concern of the government over energy issue.
Tofail, also a former commerce minister, termed the budget a timely and feasible one, but feared its implementation.
“Investment will not increase if there is no improvement in energy situation,” he added