Review of

Securities Market in Bangladesh: A

Critical Appraisal of its Growth Since
its Inception in 1954

Part 3

Market Growth During 1990-1995

Reforms were put into place by the new
government.
Major reforms were:
Abolishing capital gains tax.
Making taka convertible on current account.
Withdrawing regulatory restrictions on foreign
& portfolio investors.
Securities Market in Bangladesh: A Critical Appraisal

Market Growth During 1990-1995

Offering tax benefits on dividends to all
investors and listed companies.
Reducing bank interest rates.
Establishment of Securities and Exchange
Commission (SEC) in 1993.
Replaced Controller of Capital Issues (CCI).
To work as an autonomous body fostering
investor confidence and Investor protection.
Securities Market in Bangladesh: A Critical Appraisal

Growth Pattern of Listed Companies

in the Securities Market (1990-1995)
Year (ended in June)

No. of securities

No. of securities (in

millions)

1990

134

161.1

1991

138

167.2

1992

149

172.3

1993

153

195.1

1994

156

214.4

1995

188

325.5

Securities Market in Bangladesh: A Critical Appraisal

Market Crash of 1996

Market experienced unusual boom and
subsequent bust.
Small investors lost life savings where select few
made fortunes.

Political incidents and change of governments in

1996 played a role.
Demand increased to buy shares as confidence
grew in the new administration.
Securities Market in Bangladesh: A Critical Appraisal

Market Crash of 1996

Share prices multiplied by 4 times.
Market capitalization increased by 265%.
Share price index went up by 260%.
But the bullish trend failed to continue and
share prices started to fall.
Index went down to 486.62 point from 3648.75
points.
Securities Market in Bangladesh: A Critical Appraisal

DSE All Share Price Index

During May 1996-July 1997

Securities Market in Bangladesh: A Critical Appraisal

Aftermath of the Crash

SEC formed an inquiry committee.
Evidence of rampant manipulation of trading in
securities were found.
15 criminal cases were lodged.
Investor Confidence in the market reduced
greatly.
Further Reform measures were undertaken
under the Capital Market Development
Program, 1997 (CMDP).
Securities Market in Bangladesh: A Critical Appraisal