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Shares and risks

Shares and risks

After Bangladeshis riot in the streets following a stock crash, investors should know there is no such thing as a permanently rising market, argues Arab News.

January 11, 2011 2:41 by

The financial authorities in Dhaka should have acted much sooner to stop this risky activity, but unfortunately they did not. Worse, when they finally ordered the banks to get out of the market, they did not put in place a mechanism that would have allowed a gradual sell off of bank positions. Instead, the institutions rushed for the exit and dumped their shares as quickly as possible. The inevitable crash in values caught out the small investor, less prepared to order his broker to sell shares.

Therefore there is very good reason for Bangladeshis to be furious with the authorities and it would be right for the government in Dhaka to hold an enquiry which would result in heads rolling. Such regulatory incompetence is inexcusable.

Moreover Bangladeshis cannot be described as financially illiterate. It is the founding home of the micro-finance movement which has spread around the globe.

Yet in the final analysis, just as was the case in Saudi Arabia, those who have been harmed by the stock market collapse in Bangladesh have only themselves to blame. No one forced them to invest. They should have researched the risks better and realized the dangers. Next time hopefully they will be wiser.

–          Arab News

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