Bangladesh Stock Exchange: Stocks dive 9.25%, investors protest

10 Jan, 2011, 12.16PM IST,AGENCIES
Bangladesh Stock Exchange: Stocks dive 9.25%, investors protest

DHAKA: Bangladesh's Dhaka Stock Exchange halted trading on Monday after stocks fell a record 9.25 percent within an hour of opening and thousands of angry investors took to the streets.

The benchmark Dhaka Stock Exchange general index (DGEN) rose 80 percent in 2010 but has suffered a series of falls in the past three weeks, sparking angry protests from investors and occasional clashes with riot police.

"The DSE has halted trading as per orders from the Securities and Exchange Commission after the benchmark index plunged 660 points, or 9.25 percent, in the first 54 minutes of trading," exchange spokesman Shafiqual Islam told AFP.

Riot police with water cannon were stationed outside the stock exchange building in central Dhaka to prevent unrest as thousands of investors gathered to express their fury at the plunge.

This is how bull markets in emerging markets end. Other emerging markets that gained a lot in 2010 would also be at risk:

Sri Lanka +92%
Mongolia +136%
Indonesia +46%
Phillippines +77%
Thailand +59%
Chile +51%
Colombia +49%

Of course, that doesn't mean that any given market can't go even higher before it falls. Sri Lanka rose 128% in 2009, so anyone who sold out then would have missed out on further gains. But obviously, buying after big gains means that the margin of safety is much smaller.

Also remember that emerging markets are very small compared to the amount of money foreigners can deploy, so the price swings can be dramatic as foreign money sloshes in (and out). The same holds true for the Singapore market...

(11-01-2011, 10:09 AM)d.o.g. Wrote: Of course, that doesn't mean that any given market can't go even higher before it falls. Sri Lanka rose 128% in 2009, so anyone who sold out then would have missed out on further gains. But obviously, buying after big gains means that the margin of safety is much smaller.

Also remember that emerging markets are very small compared to the amount of money foreigners can deploy, so the price swings can be dramatic as foreign money sloshes in (and out). The same holds true for the Singapore market...

Hear thee! So many novices money are out there. Yet the professionals are fearful.
忠言逆耳...

(11-01-2011, 11:05 AM)arthur Wrote: Hear thee! So many novices money are out there. Yet the professionals are fearful.
忠言逆耳...

How to differentiate a novice's money from a professional's

Listen to the ground sentiments, look at others who're your average investors, esp those young impulsive 1st time in cycle investors, read more forums, and walk into banks and observe.
There is a difference between fair value and undervalued, by thinking that fair is undervalued bcos of perception that current earning trend can only go up is worrisome.

capital preservation at this point in time is key!

(11-01-2011, 12:13 PM)mrEngineer Wrote: capital preservation at this point in time is key!

I support Engineer san statement

Last week a small time sub-contractor boss told me last year he make a free S300 class Mercedes from stock market……he told me that this year he confident that market will touch 3600 pts, and at this level he will liquidate all his investment portfolio and and park his money in hard asset property… However, inside my heart (my advice to him) dun be too proud of your gain, no every Sunday you are so lucky…they a possibility before it hit 3600 pts market crash liao…he should be slowly cash in, money in your pocket is yours.

(11-01-2011, 12:01 PM)arthur Wrote: Listen to the ground sentiments, look at others who're your average investors, esp those young impulsive 1st time in cycle investors, read more forums, and walk into banks and observe.
There is a difference between fair value and undervalued, by thinking that fair is undervalued bcos of perception that current earning trend can only go up is worrisome.

This is pretty true, and is a good way of assessing sentiment. I am also keeping an eye on sentiment on the ground and within forums/blogs and by monitoring STI levels. Valuations are also being adjusted according to bullish or bearish sentiments, and will rise and fall with optimism and pessimism. Such is the nature of Mr. Market.

I've been noting a lot of new fresh investors coming in late 2010 and early 2011. Could this signal fresh funds flowing into the stock market and pushing prices up?

But I can also say this.. the market will continue to go up and all those newbies will poo poo our advices and thinking they are the next WBs. Seen this repeatedly.
In fact, d.o.g was too kind enough to refer to "Singapore" explicitly. I was intending to smirk in one corner actually.

And then, our advices will fall on deaf ears bcos they are getting SO MUCH dividends and SO MUCH capital appreciation that the next step is newbies going for trading on LEVERAGES.

.. And down comes Humpty-Dumpty and all the king's men couldn't put Humpty Dumpty back again..

You all can mark my words on this.

Cheers.