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  • How to Start Investing in Stocks with Only $100 in Your Pocket

    Reporter: juan modesto Rodriguez
    Published: viernes, 13 de diciembre de 2013
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    As stocks soar, everybody wants in. Bourses are on a roll, indices have hit new highs drawing in new investors. But the price of many issues rising far beyond their fundamentals has led the Securities and Exchange Commission to voice concern recently on the "abnormal" state of the stock market. As economic indicators show signs of sluggishness in countrywide business and investment, the stock market's remarkable buoyancy would appear to oppose rational behaviour. Analysts say the market is behaving in apparent opposition, however, precisely because excess liquidity is being diverted to the stock market. A lack of business and investment opportunities has resulted in idle funds, which have been pouring into stocks.

    But the price of many issues rising far beyond their fundamentals has led the Securities and Exchange Commission to voice concern recently on the "abnormal" state of the stock market.

    As economic indicators show signs of sluggishness in countrywide business and investment, the stock market's remarkable buoyancy would appear to oppose rational behaviour.

    Analysts say the market is behaving in apparent opposition, however, precisely because excess liquidity is being diverted to the stock market.

    A lack of business and investment opportunities has resulted in idle funds, which have been pouring into stocks.

    "The share market usually rises if there are signs of hopes in the economy. [At present] pessimism prevails in the economy while optimism prevails in the stock market. It is contradictory," said Abu Ahmed, who teaches economics at Dhaka University.

    "Bangladesh's share market is proving the existing economic theories wrong simply because the economy is slowing down while the market is getting overheated," he said.

    Official statistics shows that business and industry performances, as evidenced by exports and investments, are not healthy.

    Overall earnings from exports declined 21.08 percent to $902.33 million in July, from the same month a year ago, depressed by a 24 percent fall in export earnings from garment, the main foreign exchange earner.

    Local and foreign investment proposals with the Board of Investment also dropped substantially, although banks are sitting with over Tk 142 billion in excess liquidity.

    By contrast, the stock market except for price corrections—and occasional shocks on fears of anticorruption and anti-tax evasion drives—has been heating up since January as investors regained confidence after fears of a political fallout.

    The market's buoyancy may not bring any positive impact on economic growth in the short-run, say analysts, but could be a future avenue for raising capital for industrialisation after the economy passes a correction phase.
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