1 PROJECT REPORT ON “Analysis of current scenario of stock markets in Bangladesh: From investors’ perspective” SUPERVISED BY: SUBMITTED By: USB DEPARTMENT UNIVERSITY OF LIBERAL ARTS BANGLADESH Date of Submission: 29 August 2012 UMME AKLIMA ALAM Lecturer USB Department University Of Liberal Arts Bangladesh AMZADUR RAHAMAN ID: 091011110 Course code: BUS 499 USB Department University Of Liberal Arts Bangladesh
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PROJECT REPORTON
“Analysis of current scenario of stock marketsin Bangladesh: From investors’ perspective”
SUPERVISED BY: SUBMITTED By:
USB DEPARTMENT
UNIVERSITY OF LIBERAL ARTS BANGLADESH
Date of Submission: 29 August 2012
UMME AKLIMA ALAM
Lecturer USB Department
University Of Liberal ArtsBangladesh
AMZADUR RAHAMAN
ID: 091011110
Course code: BUS 499
USB Department
University Of Liberal Arts Bangladesh
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Certificate of Supervisor
It is certified that Amadur Rahaman BBA final year “summer 2012”, here is ID Number091011110, he completed his project under my supervision.
I wish him success in his future.
Signature
Date:
Umme Aklima Alam
Lecture of USB Dept.
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Abstract
The history of share market in Bangladesh is very old. It started more than fifty years ago. After
many obstacles and problems Dhaka Stock Exchange has come to a position where it is now
.The market has almost 3 million investors as per as the BO account number. But it is a matter
of great surprise that there has never been a survey on the investors .Now for the first time DSE
has done it.
People are still not properly educated about the capital market and that’s why they listen to the
rumors and take many decision while invest .In this project we tried to come up with different
profiles of the investors to understand them better and to educate them in a more specialized
manner. One important thing that this survey shows that many young people is involved to this
market. DSE has to work for them and work with them.
This survey also gives us an overview of the problems that people are facing .This report also
focuses on the system of trading and current market condition. It also looks into DSE as an
organization and evaluation its performance.
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Letter of Transmittal
29 August 2012
Umme Aklima Alam
Lecturer of USB Department
University Of Liberal Arts Bangladesh.
4/A Dhanmondi ,Dhaka 1209.
Subject: Submission of Project Report
Ma’am,
It is my pleasure to submit my project report on the topic of “Analysis of current scenario of
stock markets in Bangladesh: From investors perspective” as a requirement of BBA. In this
report,I gave an overall idea about the history of Dhaka Stock Exchange, importance of Dhaka
Stock Exchange in the economy of Bangladesh, the recent trade of capital market and investors
attitude towards capital market. Finally I gave some recommendations based on my analysis.
I feel obliged to express my gratitude to you for your cordial cooperation and to giving me an
opportunity to study such an important topic. This academic endeavor helped me to blend
theoretical study with practical knowledge.
Thanking you
……………………….
Amzadur Rahaman
ID:091011110
USB Department.
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ACKNOWLEDGEMENT
First of all, I like to acknowledge my gratitude to Almighty Allah for His blessings
without which I could not complete this report. I would also like to express my deep
gratitude and thanks to my honorable Supervisor Umme Aklima Alam, Lecturer,
USB Department, University of Liberal Arts Bangladesh for assigning a practical and
interesting study and imparting her valuable time, knowledge and resources for
preparing the report. She always guided me to finish this task successfully. Without her
help it was quite impossible to finish this project properly in time. I am also grateful to
all of my teachers who helped me to acquire knowledge during our past courses.
I am thankful to Mr.Belayet Hossain, investor in capital market, Abdur Rouf, manager
of Global Securities, Khan Jahangir Hossain, Accounts Officer of Global Securities,
Md. Abdul Jolil, Trading Executive of Global Securities, Md. Maher Alahi,Manager
of Global Securities of Shyamoly Branch and Tanvir Ahamed, young investor in
capital,market for giving me valuable information regarding attitude of investors.
I would also like to thank my classmates and friends who encouraged me to finish this
assignment successfully and all others who helped me directly or indirectly to prepare this
report.
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The report is divided into seven chapters. These are:
Chapter-1 : Introduction
Chapter-2 : Historical Background of Stock Market
Chapter-3 : Over view of Investors
Chapter-4 : Risk Related Factors
Chapter-5 : Important factors for investment decision
Chapter6 : A practical survey on investors
Chapter-7 : Conclusion
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Table of contents
Chapter-1 : Introduction
1.2 Statement of the Problem................................................................................................8
1.3 Significance of the Study..................................................................................................8
1.4 Objective of the Study.....................................................................................................9
1.5 Methodologies used in the study.....................................................................................9
1.6 Research Design...............................................................................................................9
1.7 Limitations of the study ... ..................................................................................................10
Chapter-2 : Historical Background of Stock Market
2.1 Brief History of Stock Market in Bangladesh................................................................11
Chapter-3 : Over view of Investors
3.1 Definition of investors....................................................................................................14
3.2 Classification of investors..............................................................................................14
Chapter-4 : Risk Related Factors
4.1 Definition of 'Risk' ............................................................................................................16
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4.2 Types of Investment Risk ...............................................................................................16
6.1 Company Information...............................................................................................................................30
6.2 Introduction of Global Securities.............................................................................................28
6.3 Findings and Analysis .................................................................................................33
6.4 Table of Findings .........................................................................................................35
6.5 Analysis of Data............................................................................................................35
Momtaz Plaza (4th Floor)2/2, Mokim KataraMoulvi Bazar, Dhaka - 1100Manager: Mr. Md. Shafayetull
Study AreaThe study was conducted at the Shyamoly Branch of Global Securities. This branchfounded there office in "Laila Plaza", a multistoried building beside the mirpur road. Theystarted to work on 19 November 2009.AI preset they have 7 employees under the managerialeffort of Mr. Md. Maher Alahi. There are 2511 traders regularly trading at this broker house,Atpresent they trade shares of 2-5 crore Taka per day.
6.3 Findings and Analysis
Table of Findings
Table 1.Profile of different investors(2012)
Stock investors
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Sex
Male
Female
Age
18-19
20-29
30-39
40-49
50-59
60 or over
Education level
Primary
S.S.C
H.S.C
Graduate
Post Graduate
Occupation
Job holder
Other business
Student
Unemployed
92%
8%
3%
23%
26%
21%
19%
8%
2%
27%
36%
24%
11%
19%
32%
36%
13%
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6.4 Table of Findings
Character yes No
Do you have any preference to any industry 47 3
Do you have any investment in IPO 13 37
Do you use on-line trading system 2 48
Do you think investment in stock market is
always profitable or there are some risk is here
50(risky) --
Do you consider pre-ratio analysis 18 32
Do you think about market index 16 34
6.5 Analysis of Data
Factors affecting take purchasing decision:
Among 50 respondents most of them said market price is very important. When market price fall
they buy stock. 6 person said while they take purchasing decision they consider pre-ratio. That
means only 12% investors analysis pre-ratio and 88% investors do not aware about.8% investors
said company financial status is important.
Choice of Intermediary:
Of the 50 stock investors who participated in this survey, all of them traded through brokerages.
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Preference of Share:
Out of 50 respondents 6% investors said they invest only primary share because here risk is less
than secondary share. 82% people invest only secondary market because primary share is not
available in our country and they want to earn more money which is only possible from
secondary market.14% investors invest on both primary and secondary market because by it try
to minimized risk.
The process of minimizing risk:
70% investors told they have their own risk minimization strategy to minimize the risk of losing
money. some of them make portfolio in different industry to minimize the risk But many of them
also expressed that their strategy was not perfect for the present situation of capital market.30%
of the investors in stock market do not have any strategy to minimize risk.
Reason for unhealthy situation of Bangladesh stock market:
Most of the investors who participated in survey they said liquidity circuses and political unrest
is the main reason for unhealthy situation of Bangladesh stock market. Besides that some
investors told that over valuation of share price is another cause of this situation.
Suggestion to overcome this situation:
Most of the investors said if well liquidity balance and sound political environment can be
maintain this unhealthy situation will be overcome.
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6.6 Key findings
Maximum investors in the market are educated persons. The primary motive for investing in
the capital market is to make profit People who have businesses and who work in financial
institutions are the most active players in the market. Investors usually re-invest in the
capital market or anywhere else with the gain. There are two kinds of investors- full-time
and part-time. But the number of part-timers is more among young generation. Most of
the people are not aware about the market and its facts. Many investors said that they look
into the company fundamentals before investing. But it is true that they go for rumors
also. People usually discuss with their broker before making any investment
Decision. Banking and pharmaceuticals are the most popular sectors to the investors.
However banking has lost some of its reputation for recent bad Performance. People
think that "A category" shares are of great value. After A they prefer N category and
IPO.
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6.7 Recommendations
After analyzing the findings, which I got from the interview of young investors I
intend to give some suggestions ----------
• There are many potential young people who are doing or intend to do share
business. Government and DSE should encourage them.
• Financial institutes should provide adequate financial support to young
investors to make proper investment decision.
• Market information should be properly distributed.
• As many young investors do share business as a part-time business,
information and trading facilities should be available at their working place.
• Investors should be aware about the real market condition.
• Dhaka Stock Exchange should take steps to improve the overall condition of capital
market
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Conclusion:
To conclude the report I have to say one thing- this market has got huge potentials. If properly
monitored and there is a mutual understanding among the investors and the authorities then this
market can become one of the key player to improve the economic condition of our country.
People are still not properly educated and that's why they take many bad decisions while investing.
In this project we tried to come up with different profiles of the young investors to
understand them better and to educate them in a more specialized manner. This survey also
gives us an overview of the problems that people are facing and their satisfaction level. If the
market authority can reduce these problems then obviously the satisfaction level of the
investors will go up. Finally I want conclude the survey report by saying that it was a great
pleasure working with DSE and seeing the investors so closely. I just hope this market will improve
with a rapid growth rate and become more efficient.
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7.1 References:
1. Peter S. Rose, “Money and Capital Market” third edition,1996
2. Lawrence D. J. Gitman, “Principle of Managerial Finance” third edition, Harper & Row