The latest downtrend in different stock markets across the world and US downgrade on credit rating would hardly affect the capital market of Bangladesh, said experts and stakeholders on Tuesday.
Bangladesh's capital market is not greatly intergraded with the world market and absence of large foreign portfolio investment in the country's stock market will also be another reason that will not bear any negative impact on the market, they said.
They also said even if there is another global recession, foreign investors might divert investment to emerging markets like Bangladesh from the developed countries.
The debt crisis in the US and Europe and the downgrading of US credit rating sent a wave of panic among investors in most of the countries across the globe resulting in a slump of share prices in the last few days.
As of Monday, stock losses had wiped more than $3.8 trillion from investor wealth globally over eight days and sent investors, who were fearing about a recurrence of recession, rushing for safety in the Swiss franc, the Japanese yen and gold, according to Reuters.
Although stock markets across the world experienced similar meltdown in global recession that began in December 2007 and peaked in September 2008 and continued till 2010, Bangladesh's twine bourse boomed during the period.
The DGEN, the benchmark general index of the Dhaka Stock Exchange, had gone up to 4,535.53 points on December 31, 2009 from 3,008.91 points on January 1, 2008.
Mahmood Osman Imam, a professor of finance at Dhaka University, said, 'There should be no impact on our capital market due to downtrend in the world economy this time as well, as our economy is not that much integrated with the world.'
He said that countries like China and India, who bought huge amount of US treasury bonds might have to face problems due to downgrade of US credit rating.
'If the world faces a recession once again, our economy at best might face the hit at the end of it,' he added.
Osman Imam said that countries like Singapore and Hong Kong could be interested in portfolio investment in Bangladesh as an alternative market if the global economic turbulence prolonged.
'The first world countries might not eye our stock market as lucrative,' he said.
Already, investment banks like Goldman Sachs and Franklin Templeton started investing in the stock market of Bangladesh.
Based on a research in 2005, Goldman identified Bangladesh as an emerging market. Goldman's Next-11 Equities Fund already contains shares of three Bangladeshi companies, according to information available on July 15.
Another global investment bank, Franklin Templeton also started portfolio investment in Bangladesh from July, said sources.
Ahasanul Islam, senior vice-president of the Dhaka Stock Exchange, said, 'Technically our stock exchange should not face any impact of stock crash in other counties, but somehow it might strike the local investors physiologically.'
Akter H Sannamat, a capital market analyst, said, 'Our stock market is not globally integrated and the amount of foreign investment is also insignificant. So we would not feel the heat of the stock crash in other countries.'
Yawar Sayeed, managing director of AIMS Bangladesh Ltd, said, 'Companies listed in our bourses are not export-oriented and they would not face the challenge of the world economic crisis.'
Source : New Age
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