In 2011, Bangladesh's share market experienced a significant slump and crisis due to a major scam. The scam led to a massive loss of investor's money. The share market crashed, causing widespread panic among investors.
The scam was orchestrated by a group of individuals who manipulated the market by spreading false rumors and making fake transactions. This caused a sharp decline in stock prices. The market capitalization of the Dhaka Stock Exchange (DSE) plummeted from Tk 1.65 trillion to Tk 1.15 trillion.
Investors lost millions of taka as a result of the scam, leading to widespread protests and demands for action from the government.
Curious to learn more? Check out: How Many Billions in a Trillion
Market Crisis
The market crisis of 2011 in Bangladesh was a significant event that caught the attention of investors and regulators alike. The capital markets of Bangladesh were overvalued and overheated by the end of 2010, leading to a series of falls in the market.
The largest fall in the Dhaka Stock Exchange's index on a single day was 7%, which occurred on 19 December 2010, surpassing the fall of the 1996 market crash. This fall was deemed 'normal' by analysts, who believed the market was overvalued.
The market continued to plummet, with the DGEN index falling from 8,500 to 5,500 points in just a year. The fall finally triggered small investors to go on a fast-unto-death on 16 October 2011 after forming the Bangladesh Capital Market Investors' Council.
Curious to learn more? Check out: The Fall of Pdiddy
Slump
The Slump of 2010 was a major market crisis in Bangladesh. The capital markets were overvalued and overheated by the end of 2010.
A 7% fall in the Dhaka Stock Exchange's index on a single day was the largest fall in the 55-year history of the Exchange, surpassing the fall of the 1996 market crash.
Investors took to the streets with protests, setting objects like wood and papers on fire in front of the DSE office in Motijheel.
The Bangladesh Securities and Exchange Commission and Bangladesh Bank relaxed their conservative measures to pacify the fall, causing the market to ameliorate the next day by 1.9%.
The DGEN index fell by a total of 21% from 8,500 points within December 2010 and January 2011.
Masterminds of the crash made approximately BDT 50 billion ($667 million) out of the scam during this period.
The market continued to fall, with a 5% drop on 12 June and a 4% plunge on 11 October.
Explore further: Nikes Dramatic Fall
Small investors went on a fast-unto-death on 16 October after forming the Bangladesh Capital Market Investors' Council, with opposition politicians declaring their solidarity with the protesters.
The market stood at around 5,500 index points in October 2011, down from 8,900 points just a year ago.
Protests continued throughout the months, with the most recent ones taking place in front of the DSE office in November 2011.
A different take: How Much Money Has Us Given Israel since October 7
Bailout
The Bangladesh government introduced a bailout plan in the form of a market stabilisation fund (MSF) worth BDT 50 billion ($667 million) in late October 2011.
This fund was created by the Bangladesh Association of Banks (BAB) to increase liquidity in the market and boost share prices.
Banks were encouraged to buy shares, and they reportedly did so despite facing their own liquidity crises.
Probe
A probe committee was formed to investigate the 2011 stock market crash, led by former Bangladesh Bank Governor Ibrahim Khaled.
The committee consisted of four high-powered members and presented their findings after three months on April 7, 2011.
Discover more: Thanksgiving 2011
It identified 60 influential individuals involved in the market crash, including chairman of Beximco Salman F Rahman and former DSE president Rakibur Rahman.
The committee found various irregularities, including the existence of omnibus accounts that allowed some market players to make exorbitant profits at the expense of retail investors.
SEC chairman Ziaul Khandaker and SEC member Mansur Alam were among those identified.
The report recommended drastic reform of the SEC and asked the government to publish the names of the influential players.
However, Finance Minister AMA Muhith stated that the State would not disclose the names of the accused officially.
SEC chairman Ziaul was dismissed along with other SEC members accused, and M Khairul Hossain was appointed as his replacement.
Here's an interesting read: Manchester United Loaned Players
Featured Images: pexels.com
