Heavy inflow of liquidity and entry of fresh investors pulled the stock market to its historic height in 2007, but the bull run did not truly reflect the country’s overall economic performance and corporate earnings, said analysts.

The market lost some steam towards the yearend, sparking off angry demonstrations of investors protesting against the regulator’s interventions to keep the trend in check.

Excess liquidity held by banks helped the capital market a lot.

‘Institutional investors this year channelled huge funds into the market,’ said Abu Ahmed, professor of economics at Dhaka University.

He said long-lasting bullish trend also lured huge number of fresh investors into the stock market. The stock market’s upward trend started from January 14, first trading day under the state of emergency.

‘Limited supply of shares against heavy demands put pressure on the price level of the stocks,’ said Ahmed, a stock market analyst.

‘Stock market rise did not reflect the country’s overall economic growth and corporate earnings,’ he, however, said, predicting that market would remain steady in the year beginning tomorrow.

Dhaka Stock Exchange’s general index and turnover saw all time highs, beating records of 1996, the year of the bubble bursts that left many small investors penniless overnight. DSE market capitalisation more than doubled in a year to the historic high level.

The general index climbed to its all-time high of 3093.54 points on November 19. The benchmark index gained 1,434.12 points or 91 per cent to close at 3017.21 on Sunday, last trading day of 2007.

Turnover at the country’s prime bourse recorded its highest mark with total transaction of Tk 3.1683 billion on October 22. The year’s lowest turnover was recorded at Tk 0.2332 billion on January 7.

DSE market capitalisation stood at Tk 742.20 biliion on December 30, while it was Tk 310.66 billion on January 3. The market indicator hit its all-time high of Tk 757.75 billion on November 19.

Faruq Ahmad Siddiqi, chairman of the Securities and Exchange Commission, said, ‘Stock market achieved phenomenal growth in 2007.’

‘Ideal situation for a market is when it runs without intervention,’ said the SEC chief. ‘We, however, have to take some measures to contain the market that was bubbling and heading for volatility.’

Mohammad Habib, a retail investor, however, said the regulator’s moves dampened the investors’ mood and led to the demonstrations in the last two months of the year.

The SEC chief said confidence of the investors in the market grew significantly in the year. ‘We have to keep their confidence intact.’

Siddiqi said the commission would find out the reasons why private sector companies were unwilling to list on the market.

‘We are working on introduction of book-building process of IPOs in the new year.’ He hoped that planned offloading of the government’s shares in the state-owned companies and listing of mobile phone operators would add further impetus to the market.

DSE chief executive officer Salahuddin Ahmed Khan said investors now preferred capital gains to dividends as transactions at the market increased heavily.

He said foreign portfolio investment also doubled this year, posting a total portfolio turnover of Tk 11.00 billion.

The government should take up policy to meet the demands of investors, he stressed.