Internship Report BBA

Syed Kamal Uddin (Suman)

[email protected]

INTERNSHIP REPORT

ON

HUMAN RESOURCE PROCESS OF

DHAKA STOCK EXCHANGE LTD.

ON

HUMAN RESOURCE PROCESS OF DHAKA STOCK EXCHANGE LIMITED

Supervisor:

Professor M. Shahjahan Mina

Advisor

Faculty of Business and Economics Daffodil International University

Prepared by:

Syed Kamal Uddin

ID # 053-11-978 BBA (12th Batch) Major in Finance

Faculty of Business & Economics Daffodil International University

Daffodil International University

23th February 2009

To

Professor M. Shahjahan Mina

Advisor

Faculty of Business and Economics Daffodil International University

Subject: Submission of Internship Report.

Dear Sir

With proper honor I would like to state that I have completed the Internship Report assigned by you named “Human Resource Process of Dhaka Stock Exchange Ltd”. I have tried my

best to fulfill all the requirements to make my Internship Report according to your expectation. Without the sincere co-operation and proper guidance of you, it is not possible for me to prepare the report. For this act of kindness I am grateful to you.

So, I would like to request you to accept my Internship Report that is enclosed with this application for your kind consideration.

Sincerely yours

Syed Kamal Uddin

ID # 053-11-978 BBA (12th Batch) Major in Finance

Faculty of Business & Economics Daffodil International University

Certificate of Approval

This is to certify that the Internship Report on “Human Resource Process of Dhaka Stock Exchange Ltd.” in the bona fide record at the report is done by Syed Kamal Uddin, ID # 053-11-978, of the Department of Business Administration; Daffodil International University has been approved for presentation and defence/viva-voce. Under my supervision Syed Kanal Uddin worked with Dhaka Stock Exchange Ltd. as an Intern.

The Report has been prepared under my guidance and is a record of the bona fide work carried out successfully. It has indeed been a great pleasure working with him. I wish him all success in life.

………

Professor M. Shahjahan Mina

Advisor

Faculty of Business and Economics Daffodil International University ……… Date

Letter of Authorization

This is to certify that Mr. Syed Kamal Uddin has been doing Internship Program in Dhaka Stock Exchange Ltd under Human Resources Department. from 3rd May 2009. He has been doing BBA from Faculty of Business and Economics, Department of Business Administration, Daffodil International University. ‘Internship’ is a part of his BBA program. We have tried our best to provide him all the assistance to complete his internship as a part of his BBA.

I hope that the report of Mr. Syed Kamal Uddin will be effective for anybody and any organization to get proper knowledge about the Human Resources Management.

I wish him all the success in his life.

Ms. Hosne Ara Pervin

Assistant General Manger

HRM, Administration & Training Affairs Dhaka Stock Exchange Limited.

I do hereby solemnly declare that the work presented in this Internship Report has been carried out by me and has not been previously submitted to any other University/College/Organization for an academic qualification/certificate/diploma or degree.

The work I have presented does not breach any existing copyright and no portion of this report is copied from any work done earlier for a degree or otherwise.

I further undertake to identify the Department against any loss or damage arising from breach of the foregoing obligations.

……….

Syed Kamal Uddin

ID # 053-11-978

Batch: 12th, BBA (Finance)

………. Date

Internship in BBA program is a scope of gathering practical knowledge on corporate environment by engaging in an organization for a certain period. This report on is the result of a survey that is conducted during the internship period in DSE.

Several Multinational stock exchanges are operating their activities since long time. They are playing a very important role in enhancing the quality of the stock exchange service in the country. Basically these multinational stock exchanges are providing services to the local and Govt. stock exchange of our country regarding foreign trade transaction.

In quality maintenance, stock exchange plays an important role. A good harmony between foreign and local stock exchange can ensure a quality service in international trade service. The position of the multinational stock exchange in this market gives us a view about their performance and overall market condition. In this report, an attempt has been made to portray a picture on market condition and service quality of institutional stock exchange organizations in our country.

Internship program in Dhaka Stock Exchange Ltd. has given me practical orientations with the real work life. One individual without the help of others can complete no work. In every step of this study many individuals and institutional experts supported me. It gives me an immense pleasure to acknowledge them with my gratitude. First of all, I want to express my heartfelt gratitude to Almighty Allah without whose help it would not have been possible for me to prepare this paper. I would like to express my deep sense of gratitude to all those who are always a source of inspiration for their involvement, unconditional cooperation and support in all my academic endeavors. Without their encouragement, I could not stand in pride as having done some academic work. I am indebted to all of them.

It would be unthinkable to prepare such a paper and present it in a lucid manner without the help of my supervisor Professor M. Shahjahan Mina, Advisor, Daffodil International University. I would like to extent my gratitude to Ms. Hosne Ara Pervin, AGM, HRM,

Administration & Training Affairs, Dhaka Stock Exchange Ltd, for her kind advice and suggestions. Then I would like to thanks Md. Saiful Islam, Executive, HRM, Administration & Training Affairs and Mr. Mohammad Ebna Reaz, Executive Officer, Merchant Banking Division, South East Bank Ltd. and all superior, subordinate and colleague of “Dhaka Stock Exchange Ltd.” for their advice and support and also the classmates of BBA, Daffodil International University who made it easy for me to complete university life. I would like to express my gratitude to Research, Development & Information, Public Relations & Publications Department, Monitoring, Investigation & Compliance, Market Operation, and other personnel of for their cooperation to make this report effective.

I would like to thank all those who contributed through their comments and suggestions to prepare this paper in a comprehensive manner. In order to prepare this paper I tried to devote my best effort and knowledge at a great extent. I beg pardon to my supervisor for my unintentional error, if any. Finally I would like to thank my family for their support and help during the entire tenure of BBA.

It gives me immense pleasure that during internship period, as part of the BBA program. The internship report is prepared with respect to the two months internship program in Dhaka Stock Exchange Ltd. The internship program helped me a lot to learn about the practical environment and situation of a financial institution and also make up a bridge between the theoretical and practical aspects and also to implement my theoretical knowledge in to the practical and realistic work environment.

This report is composed of six chapters, which are further divided into different parts. In the first chapter the introductory portion has been presented along with background of the study, benefit of study and the objective of the study and the methodology, limitationand an overview of DSE, has been discussed in chapter two. Chapter three deals with the capital markets, primary market, secondary market, securities and exchange commission, functions of capital market, surveillance of DSE, instrument available in the capital market, share categorization: A, B, G, Z & N, total listed company, and Central Depository Bangladesh Limited (CDBL).

In Chapter four, discussed responsibilities of HR, admin & training affairs department, routine tasks, training activities, disciplinary procedure, employee benefits and HR policy for DSE employee. In chapter five, I have highlighted the recruitment and selection process of DSE. In chapter six, I have highlighted the, findings recommendation and conclusion, which includes details.

I tried to bridge up all the findings based on analysis and discussions. While preparing the report I always tried my best level to make it authentic and at the same time easily understandable. For this, I came up with a number of reference books and journals to get the theoretical backup. In spite of my heart and soul effort there may be some mistakes and unforeseen errors, which may arise due to my naive or inexperience state.

Various rules and regulations, policies and procedures relating to different activities have also been enumerated here

DSE has lots of scope to improve in this market as they have some competitive advantages as a world’s one of the largest Stock exchange .It has number of branches around the Bangladesh. Which can play an important role to create a positive impression in the market.

Particulars

_{Page #}

Preface

_I

Acknowledgement II

Executive Summary III

Chapter One: Introductory Part 1-6

1.1 Introduction 2

1.2 Origin of the Study 2

1.3 Background of the study 2

1.4 Statement of the Problem 3

1.5 Objectives of the Study 3

1.5.1 Broad Objective 4

1.5.2 Specific objectives 4

1. 6 Benefit Of The Study 4

1.7 Methodology 5

1.8 Limitations 6

Chapter Two: Overview of Dhaka Stock Exchange Limited 7-20

2.1 DSE at a Glance 8

2.2 Preamble 9

2.3 History of DSE 9

2.3.1 DSE Tower at Nikunja 11

2.3.2 Vision 12

2.3.3 Mission 12

2.3.4 Objectives 12

2.4 Legal Control- DSE As An Organization 13

2.5 The Major Functions Of DSE 13

2.7 Policy Making Body: The Board Of Directors 14

2.8 DSE Management 15

2.8.1 DSE Board of Directors 16

2.9 Other Activities 18

2.10 Different Departments Of DSE

18 2.11 DSE Website

19 2.12 Organogram Of DSE

20

Chapter-3: Capital Market: DSE 21-42

3.1 Capital Market 22

3.2 Primary Market 22

3.3 Secondary Market 22

3.4 Securities And Exchange Commission 23

3.5 DSE Ranked Fourth Best Performing Exchange In The World 23

3.6 Market Development 24 3.7 Surveillance Of DSE 25 3.7.1 Price Monitoring 26 3.7.1.1 Investigations 26 3.7.1.2 Surveillance Actions 26 3.7.1.3 Rumor verification 26 3.7.2 Position Monitoring 27 3.8 Market Expansion 27 3.9 Technical Development 27 3.10 Global Economy 28 3.11 Bangladesh Economy 30

3.12 The Global Stock Market 31

3.13 Bangladesh Stock Market 31

3.14 Market Capitalization 33

3.16 Share Categorization: A, B, G, Z & N 35

3.17 Total Listed Company 36

3.17.1 Listed Sector Of DSE 41

3.18 Central Depository Bangladesh Limited 41

3.18.1 What Is A Depository? 42

Chapter-4: Human Resources Department of DSE 43-62

4.1 Present Organogram Of Human Resources Department 44 4.2 Responsibilities Of HRM, Admin & Training Affairs Department 45

4.3 Key Functions of HRD 46

4.3.1 Recruitment 46

4.3.2 Selection 46

4.3.3 Induction and Orientation 46

4.3.4 Training 46

4.3.4.1 Local Training 47

4.3.4.2 Overseas Training 47

4.3.5 Placement 48

4.3.6 Performance Appraisal 48

4.3.6.1 Rewarding the Good Employees 48

4.3.7 Promotion: 49

4.3.8 Personnel Development 49

4.3.9 Recruitment of Intern 49

4.3.10 Human Rights at Work Place 49

4.3.11 Attendance 50

4.3.12 Leave 50

4.3.12.1 Ordinary Leave 51

4.3.12.2 Extra-ordinary leave 52

4.3.14 Preserve All Employees Personal File 54 4.3.15 Proper Implementation of DSE Service Rules 54

4.3.16Disciplinary Procedure 55 4.3.17 Employee Benefits 57 4.3.17.1 Overtime 57 4.3.17.2 Festival Bonus 57 4.3.17.3 Employee Remuneration 58 4.3.17.4 Food Allowance 59 4.3.17.5 Special Bonus/Allowance 59 4.3.17.6 Increment 59

4.3.18 Payment of Compensation (Group Insurance) 60

4.3.18.1 Health Insurance 60

4.3.18.2 Provident Fund 61

4.3.18.3 Gratuity 61

4.3.19 Transfer 61

4.3.20 Termination

Chapter- 5: Recruitment & Selection Process Of DSE 63-73

5.1 Recruitment 64

5.2 Sources of Recruitment 64

5.2.1 Recruitment process is as follows 65

5.3 Recruitment Procedure 66 5.3.1 External Recruitment 66 5.3.2 Media Advertisement 66 5.3.3 University Recruiting 66 5.3.4 Internet 67 5.3.5 Interns 67 5.3.6 Internal Recruitment 68

5.4 Selection 68

5.5 Selection Criteria 68

5.6 Categories of Criteria 68

5.6.1 Formal Education 68

5.6.2 Personal Characteristics and Personality Type 69

5.7 Selection Process 69

5.7.1 Step 1: Initial Screening 69

5.7.2 Step 2: Completing the Application Form 70

5.7.3 Step 3: Employment Written Test 70

5.7.4 Step 4: Cognitive Ability Test 71

5.7.5 Step 5: Employment Interview 71

5.7.6 Step 6: Reference & Medical Check Up 72

5.7.7 Step 7: Selection Decision 72

5.7.8 Step 8: Job Offer 72

5.9 Critical Aspects of Labor force of DSE 73

Chapter- 6: Findings, Recommendations and Conclusion 74-82

6.1 Findings on HRD 75

6.2 Staff or Personnel Planning 76

6.3 Lack of Forecasting of Internal and External Recruitments 76

6.4 Reference Checking 77

6.5 Equal Employment Opportunity Benefits 77

6.6 Absence of Diverse Workforce 77

7.1 Recommendations 78-81

7.2 Conclusion 82

CHAPTER-1

1.1 Introduction

Bangladesh capital market is one of the smallest in Asia but the third largest in the south Asia region. It has two full-fledged automated stock exchanges namely Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) and an over-the counter exchange operated by CSE. It also consists of a dedicated regulator, he Securities and Exchange Commission (SEC), since, it implements rules and regulations, monitors their implications to operate and develop the capital market. It consists of Central Depository Bangladesh Limited (CDBL), the only Central Depository in Bangladesh that provides facilities for the settlement of transactions of dematerialized securities in CSE and DSE.

1.2 Origin Of The Report

This paper has been prepared as partial fulfillment of the internship program of the BBA Program, under Daffodil International University. This report “Human Resources Process

of Dhaka Stock Exchange Ltd.” is the output of the 3 months long internship program at Dhaka Stock Exchange Ltd., Dhaka, Bangladesh. This report has been authorized by Ms. Hosne Ara Pervin, Assistant General Manager, HR, Admin & Training Affairs, Dhaka

Stock Exchange Ltd and approved Professor M. Shahjahan Mina, Advisor, Daffodil International University.

1.3 Background Of The Study

As a mandatory part of BBA program all the students have to undergo an internship program of three months duration in any organization with a view to acquiring practical knowledge. Theoretical Knowledge is not enough for a business student. There is a gap between the theoretical knowledge and practical knowledge. Our internship program has been launched mainly to bridge the gap.

Dhaka Stock Exchange Ltd is the largest capital market in Bangladesh. The organization

offers students the perfect opportunity to gain on-the-job experience by supporting and guiding them during their internship program in many business areas. After all they know that today’s students can be tomorrow’s most efficient employees. Through internship

students become aware of organization al culture and learn how to show professional excellence to a great extent. This learning helps them when they finally enter into practical field.

1.4 Statement Of The Problem

In the context of Bangladesh now capital market is very much become large. So it is a challenge for any employees to survive successfully in this competitive environment. In order to survive, its human resource management must be effective and efficient. Now a day, Human Resources Department is an integral part of any organization as the success or failure of an organization depends to a large extent on its human resources. It is people who make things happen finally. Other factors of production are completely useless without people. It is the responsibility of HR department to recruit the right people at the right job at the right time. I have joined as an Intern in Dhaka Stock Exchange Ltd (DSE) and interviewed several Executives of Human Resource Department during my internship period. But while working on recruitment procedures of this organization. I have observed some limitations like- absence of equal employment benefits, absence of diverse workforce, absence of staff planning, lack of forecasting of internal and external recruitment, absence of inter organizational communication and interpersonal skill etc.

So the purpose of my report to view and analyze the Human Resources Process of DSE, identify problems areas and recommend the ways to overcome.

1.5 Objectives Of Study

In this study I have chosen Human Resources Process of Dhaka Stock Exchange Ltd as my assignment topic. I have collected the information related to the topic through the Internet and personal interview. As a student of BBA I was encouraged to find the similarities between my learning and real world situation. So, this can also be considered as the objective of the paper in a broader sense.

1.5.1 Broad Objective

Objective of this report is to evaluate the activities of overall Human Resources Process of the Dhaka Stock Exchange Ltd and derive findings concentrating on problem areas.

1.5.2 Specific objectives

Following specific objectives are identified:

 To study and analyze Dhaka Stock Exchange Ltd., with special emphasis on its background, functional environment, & HRM.

 Overview of the organization and their HR Policies and Procedures.

 How does the organization monitor the implementation.

 To study and analyze the current recruitment and selection process.

 Detail analysis of sources of potential candidates.

 Derive lessons learnt during the whole process.

 To have an overall idea by linking the theoretical concept of hiring Process with compensation strategy

 To focus on the significance of doing the compensation strategy during the hiring Process in the organization

 To find problem areas and recommend suggestions to overcome.

1.6 Benefit Of The Study

The report provides the necessary information of the HR department and recruitment and selection process of Dhaka Stock Exchange Ltd. The information will be very helpful for the HR department to overcome the weak areas and determine necessary adjustment to increase the efficiency of HR personnel. The study especially focuses on the recruitment and selection process and has a brief idea about other HR related aspects. The most likely benefits are:

 The study provides an insight to understand HR activities of Dhaka Stock Exchange Ltd.

 The study reveals the overall guideline of a standard recruitment and selection procedure

The study provides necessary information regarding the difficulties faced by the organization.

1.7 Methodology

The report is prepared on the basis of overall performance of DSE. Different record,

statement, Annual report has helped me preparing this report. The subject material of this report is on primary and secondary sources of data and information.

Sources of information

Primary source

 Observation of various departments.

 Interview of different employees. Secondary source

 Annual report of DSE.

 Extensive literature search on the basis of document and publication from DSE library.

 Journal & publication from different local and International organization

 DSE Website: www.dsebd.org

1.8 Limitations

It’s a great pleasure for me to work on this report. During preparing my report I will learn lots of new things, which are much related to my report materials. It helps us to fulfill my study, which is really needed for me. But still I face some problem for my report.

 Due to the time constraints it’s really hard for us to collect all the data. Time is so limited and I do not have enough time to collect the data.

 Still I have tried our best to add more authentic information as much as possible for us. I think that my report will be helpful for those people who are interested to know about the compensation process.

I have also information limitations because the people I have interviewed they did not disclose information as I needed. Moreover, they skipped much information technically like- internal and external recruitment budgeting process.

1. Improper combination among various departments.

2. Due to the lack of time I could not acquire in depth knowledge of the activities of different department perfectly and clearly.

3. Adequate book, publication and journals were not available. 4. Insufficiency of necessary information and data.

CHAPTER-2

Overview of

DSE New Building at Nikunja, Uttara

2.1 DSE At A Glance

Incorporated as East Pakistan Stock Exchange Association Ltd.: 28th April 1954

Start of Formal Trading: 1956

Renamed as East Pakistan Stock Exchange Ltd.: 23rd June 1962

Renamed as Dacca Stock Exchange Ltd.: 13th May 1964

Trading Suspended under new State Policy: 16th December 1971

Trading Resumed in Bangladesh: 16 August 1976

Starting Of All Share price Index calculation: 16th September 1986

Share price Indices calculation on basis of IFC Designed formula: 1st November 1993

Starting of Automated trading: 10th August 1998

Starting Of DSE-20 Index calculation: January 2001

Starting Of DSE General Index calculation: 27th November 2001

Start of CDS through CDBL: 24th January 2004

2.2 Preamble

The Dhaka Stock Exchange is the prime bourse of the country. Through its nonstop highly fault-tolerate screen based automated trading system the exchange has been offering facilities for transparent and highly efficient provisions for secondary market activities of securities. The management of the Exchange is vested with the Board of Directors comprising 12 members elected from the shareholders of DSE, 12 non-elected independent Directors representing different Institutions, Chambers and Professional bodies and the CEO of the Exchange

A team of qualified executives runs the overall operations of the exchange. The bourse at present offers trading facilities for 401 securities worth Tk. 10110.30 billion-market capitalization, which contributes 18.20% of the total GDP of the country. With a nationwide coverage through branches of brokers and dealer, DSE espouse shared vision of Bangladesh business all over the country. The exchange maintains the lead in providing a launching pad for mobilizing saving of Bangladesh living home and abroad. Besides Bangladesh, non-resident & foreign institutional investors have been showing growing interest in this market over the years.

2.3 History Of DSE

The Necessity Of Establishing A Stock Exchange In The Then East Pakistan Was First Decided By The Government When, Early In 1952.It Was Learnt That The Calcutta Stock Exchange Had Prohibited The Transactions In Pakistani Shares And Securities. The Provincial Industrial Advisory Council Soon Thereafter Set Up An Organizing Committee For The Formation Of A Stock Exchange In East Pakistan. A Decisive Step Was Taken The Second Meeting Of The Organizing Committee Held On The 13th March 1953. In The Cabinet Room, Eden Building, Under The Chairmanship Of Mr. A. Khaleeli, Secretary Government Of East Bengal, Commerce, Labor And Industries Department At Which Various Aspects Of The Issue Were Discussed In Detail. The Then

Central Governments Proposal Regarding The Karachi Stock Exchange Opening A Branch At Dhaka. , Did Not Find Favour With The Meeting Who Felt That East Pakistan

Should Have An Independent Stock Exchange. It Was Suggested That Dhaka Narayanganj Chamber of Commerce & Industry Should Approach Its Members For Parchase Of Membership Cards At RS.2000 Each For The Proposed Stock Exchange. The Location Of The Exchange It Was Thought Should Be Either Dhaka Narayanganj Or Chittagong. An Organizing Committee Was Appointed Consisting Of Leading Commercial And Industrial Personalities Of The Province With Mr. Mehdi Ispahani As The Convener In Order To Organize The Exchange.

The Chamber Informed Its Members And Members Of Its Affiliated Associations Of The Proceedings Of The Above Meeting, Requesting Them To Intimate Whether They Were Interested In Joining The Proposed Stock Exchange. This Was Followed By A Meeting, At The Chamber Of About 100 Persons Interested In The Formation Of The Exchange On 07.07.1953. The Meeting Invited 8 Gentleman To Become Promoters Of The Exchange With Mr. M Mehdi Ispahani As The Convener And Authorized Them To Draw Up The Memorandum And Article Of Association Of The Exchange And Proceed To Obtain Register Under The Companies Act.1913. The Other 7 Promoters Of The Exchange Were Mr. J M Addision-Scott, Mr. Mhodammed Hanif, Mr. A C Jain, Mr. A K Khan, Mr M Shabbir Ahmed And Mr. Sakhawat Hossin.

It Was Also Decided That Membership Fee Was To Be Rs.2000 And Subscription Rate At 15 Per Month. The Exchange Was To Consist Of Not More Than 150 Members. A Meeting Of The Promoters Was Held At The Chamber On 03.09.1953 When It Was Decided To Appoint Orr Dignam & Co., Solicitors To Draw Up The Memorandum And Articles Of Association Of The Stock Exchange Based On The Rules Of Stock Exchange Existing In Other Countries And Taking Into Account Local Conditions.

The 8 Promoters Incorporated The Formation As The East Pakistan Stock Exchange Association Ltd. On 28.04.1954. As Public Company. On 23.06.1962 The Name Was Revised To East Pakistan Stock Exchange Ltd. Again On 14.05.1964 The Name Of East Pakistan Stock Exchange Limited Was Changed To "Dhaka Stock Exchange Ltd."

At The Time Of Incorporation The Authorized Capital Of The Exchange Was Rs. 300000 Divided Into 150 Shares. Of Rs. 2000 each and by an extra ordinary general meeting adopted at the extra ordinary general meeting held on 22.02.1964 the authorized capital of the exchange was increased to Tk. 500000 divided into 250 shares of Tk. 2000 each. The paid up capital of the exchange now stoods at Tk.460000 dividend into 230 shares of Tk. 2000 each. However 35 shares out of 230 shares were issued at TK. 80,00,000 only per share of TK. 2000 with a premium of TK. 79,98,000.

Although incorporated in 1954, the formal trading was started in 1956 at Narayanganj after obtaining the certificates of commencement of business. But in 1958 it was shifted to Dhaka and started functioning at the Narayangonj chamber building in Motijheel C/A. On 1.10.1957 the stock exchange purchase a land measuring 8.75 Kattah at 9F Motijheel C/A from the Government and shifted the stock Exchange to its own location in 1959.

2.3.1 DSE Tower At Nikunja

DSE has undertaken the construction work for its Second 14-storied 3 level basement building at Nikunja with all the state of the art commercial facilities; it is expected to be a landmark building. It will be a modern building with all modern amenities. It is to be mentioned here that the Hon’ble Prime Minister Sheikh Hasina specially allotted this piece of land reigned in 1998. Dhaka Stock Exchange took over possession of the four-bigah land on 25th November 1997 from RAJUK. Construction of DSE Tower is expected to be completed in three years. The need for construction of DSE Tower at Nikunja was felt necessary to meet the growing demand of facilities from all the parties involved with this market, which by the existing one may not be fulfilled. As the activities of the prime bourse is expanding rapidly in the last decade, this existing premise cannot accommodate all the facilities in its present establishment at Motijheel for which DSE appealed to the then Government for a big plot showing the justification. The Government was pleased and allocated the 4 bigah land in the name of Dhaka Stock Exchange Ltd. Dhaka Stock Exchange on 30th April, 2006 signed an agreement with Development Design Consultants Ltd. for architectural and engineering consulting services for construction of multi-storied DSE Tower. To mention, DSE Tower will be set up on 1.33 acres (57,600 sfts) of land. The projected building area will be 741,109

square feet. DSE signed a contract with GBB Limited on February 28, 2007 for the first phase construction work of 14 storied with 3-basement DSE Tower building for Taka 89.97 crore. The contractor, GBB Limited, has started the construction work in the month of April 2007 and the construction work is in progress and is expected to be completed by 2010.The basement work of the DSE Tower has already been completed. By end of December 2008, 15% of the work is reported to have been completed as against target progress of 39.79% as per original program.

2.3.2 Vision

 Regulating the market structure through proper rules and strict compliance by members.

 Expansion of DSE trading network to cover 504 thanas. Introduce Book Building system in Bangladesh capital market.

 Introducing derivative market

 Continuous promotion of stock investment throughout the country.

 Create opportunity to cross border trading with SAFE countries.



2.3.3 Mission

To create an efficient and transparent Market facilitating entrepreneurs to raise capital, so that it accelerates industrial growth for overall benefit of the economy of the country.

2.3.4 Objectives

 Develop a strong platform for entrepreneurs for raising capital;

 Provide an investment opportunity for small and large investors;

 Develop a transparent market ensuring investor's interest;

 Provide a fully automated trading system with most modern amenities to ensure: quick, easy, accurate transactions and easily accessible to all;

 Attract foreign institutional investors to invest in Bangladesh;

 Collect, preserve, disseminate data and information on stock exchange;

2.4 Legal Control- DSE As An Organization

The Dhaka Stock Exchange Ltd is registered as a Public Limited Company. It is a self-regulatory organization and its activities are regulated by:

- Articles of Association

- Own rules, regulations and byelaws - Companies Act 1994

- Securities and Exchange Ordinance 1969 - Securities and Exchange Rules 1987

2.5 The Major Functions Of DSE

 Listing of Companies. (As per Listing Regulations).

 Providing the screen based automated trading of listed Securities.

 Settlement of trading. (As per Settlement of Transaction Regulations)

 Gifting of share / granting approval to the transaction/transfer of share outside the

 Market Administration & Control.

 Market Surveillance.

 Publication of Monthly Review.

 Monitoring the activities of listed companies. (As per Listing Regulations).

 Investor’s grievance Cell (Disposal of complaint bye laws 1997).

 Investors Protection Fund (As per investor protection fund Regulations 1999)

 Announcement of Price sensitive or other information about listed companies

2.6 Membership

The DSE Currently has 238 members who are the shareholders of the public Limited Company. Membership is open to foreigners. The Securities and Exchange Commission

(SEC) licenses members for conducting trading as Stock Brokers, Dealer or both all Brokerage house have been corporatized in 2006.

2.7 Policy Making Body: The Board Of Directors

Through continuous reforms, Dhaka Stock Exchange has emerged into a modern Exchange. The day-to-day affair of the DSE is run by a highly qualified and trained executive team who works independently under polices set by the Board of Directors.

The DSE Board comprises of 25 members of whom 12 are elected through direct from the 235 shareholders of DSE. The remaining 13 Board Members are Ex-Officio. They include 12 members representing distinguished personalities from different key economic and social arena of the country. The CEO of the Exchange is also a Director of the Board.

 One councilor to be nominated by the ministry of Finance not below the rank and status of Joint Secretary.

 One councilor to be nominated by the Bangladesh Bank from amongst its officers of or above the rank of General Manager.

 President of Institute of Chartered Accountants of Bangladesh, Ex-officio Member.  President of Federation of Bangladesh Chamber of Commerce and Industry,

Ex-officio Member.

 President of Metropolitan Chamber of Commerce and Industry, Ex-officio Member.  President of Dhaka Chamber of Commerce and Industry, Ex-officio Member.

 One councilor to be nominate by the Ministry of Commerce not below the rank and status of joint Secretary as member.

 One councilor to be nominate by the Ministry of Law not below the rank and status of joint Secretary as member.

 One councilor to be nominate by the Ministry of Industry not below the rank and

status of joint Secretary as member.

 President of Supreme Court Bar Association, Ex-officio Member.  Head of the Department Finance /Economics, Dhaka

2.8 DSE Management

A highly qualified and trained team of Executive report to the CEO about the day-to-day affairs of DSE. The management team runs independently under polices set by the Board of Directors. A Chief Operating Officer, Chief Financial Officer, and Chief Technology officer assists the CEO to manage day-to-day affairs of the bourse.

Chief Financial Officer

& Acting CEO

Satipati Moitra, M.Com, FCMA

PABX : 9564601,7175705-9, Ext-107 Mobile: 01713425800

Email : mailto:[email protected]@bol-online.com

Chief Technology Officer

A. S. M. Khairuzzaman

Phone: 9564601,7175703-11, Ext-123

Email : mailto:[email protected]:[email protected]

[email protected]

General Manager & Secretary

Shaikh Mohammadullah, MBA (IBA), FCS Phone: 9564601,7175705-9, Ext-102 Mobile: 01713333224

Email : [email protected], [email protected]

Name Office Address Residence Address Photography

Mr. Md. Rakibur Rahman

President, DSE

Room No - 508 , Stock Exchange Building , 9/F , Motijheel C.A., Dhaka-1000 Ph: 9551960, 9559925, PABX : 9564601, 7175705-9 Ext. 508 Navana Villa Flat No. 201, Plot No. 10 Road No. 118 Gulshan, Dhaka Phone: 8823500, 9895837 Mobile: 01819-219396 Mr. Saiful Islam Senior Vice-President, DSE Suite No. 1002-3 9/E, Motijheel C/A, Dhaka-1000 Phone: 9561070, 9561232, 9564959, 9569302 Fax: 9562254, 9564991 Apartment 2B, House No.16, Road No. 01,

Baridhara Diplomatic Zone, Dhaka-1212 Res: 8859055 Mobile : 01711-546802 Mr. Md. Shakil Rizvi Vice-President, DSE

Room No: 905, DSE Annex Building (8th Floor) 9/E, Motijheel C/A, Dhaka-1000 Phone: 7175716, 9570985, 7166096, 7170993-4 PABX :9564601, 7175705-9 Ext- 429 Phone: Mobile: 01715864740 Mr. Abdul Haque Director, DSE Room No - 618, 619, 709, 715 Stock Exchange Building 9/F, Motijheel C.A. Dhaka-1000 Phone: 9551815, 9564573,9568417 PABX : 9564601,7175705-09 Ext-715/709

9/2, Bagabati Banerjee Road Hatkhola

Dhaka - 1203 Mobile: 01711-537753

Mr. M.A. Quayum

Director, DSE

Room no. 704 (6th Floor), Modhumita Building, 158-160,Motijheel C.A., Dhaka-1000. Ph: 9557677 PABX : 9557677, 7168345 Road No. 104, House No. 5/F Flat No. A-4/S Gulshan -2, Dhaka - 1212 Phone: 8814385 Mobile: 0175212755 Mr. Md. Hanif Bhuiya Director, DSE

Room no. 620 , 621 & 635 Stock Exchange Building 9/E, Motijheel C/A, Dhaka-1000 Mobile: 01713033829 Phone:9553321, 9563287,9554712 PABX :9564601, 7175705-09, Ext:620, 621, 635

Ms. Lailun Nahar Ekram

Director, DSE

House No. - 8A, Road No. - 50, Gulshan-2, Dhaka - 1212

Phone: 9887423, 9892714 Fax: 9894877

House No. 14 (5th Floor), Road No.- 140, Gulshan - 01, Dhaka - 1212 Res: 8855098 Mobile: 01711-567122 Mr. Masudul Haque Director, DSE

Suite No. - 603 (5th Floor), Modhumita Building, 158-160 Motijheel C/A, Dhaka-1000

Phone: 7174368, 7174451, 9561993

116, Bashir Uddin Road, Kalabagan, Dhanmondi, Dhaka-1205 Res: 9115571, 8144836 Mobile: 01711-542131 Mr. Mohammad Nasir Uddin Chowdhury Director, DSE Room No. 322 9/E, Motijheel C/A, Dhaka-l000 Phone: 9561868, 9570496, 7174256, 7174315, 9556792 Fax: 9555384, 9562207 4/404, Eastern Point 8-9, Shantinagar, Dhaka Res: 8354163 Mobile: 01819-213180 Email: [email protected] [email protected] Mr. Md. Rafiqul Islam Director, DSE Room No - 901 (8ht floor) 9/E, Motijheel C/A, Dhaka-l000 Phone: 9666927,9667011 PABX: 9564601 Ext-524 Phone: 9341147 Mobile: 01711-526213 Mr. Md. Feroz Khan Director, DSE Room No - 313 (2nd Floor) Stock Exchange Building 9/F, Motijheel C/A, Dhaka-l000 Phone: 9552390,9561667 PABX: 9564601 Ext-313 Phone: 8810256 Mobile: 01711-548744 Mr. Md. Shahjahan Director, DSE Room No - 213 Stock Exchange Building 9/F, Motijheel C/A, Dhaka-l000 Phone: 9551403 PABX:9564601,7175705-09 Ext-213 Phone: 9882204 Mobile: 01711 536876

2.9 Other Activities

 DSE Publishes Monthly Review to keep investors community informed on the overall development in securities market. DSE also publishes a Bengali fortnightly and Information Booklet regularly. Besides publication of a Stock Market Terminology in both Bengali an English is in the offing.

 DSE has an arbitration system to resolve disputes or claims against members through a panel judges compromising 5 retried districts judges.

 Investors Protection Fund, which is contributed by the Brokers of the Exchange for the benefits of investors and managed by s board of trusty who are independent body from outside the Exchange.

2.10 Different Departments Of DSE

Information & Communication Technology (ICT) Division

 System & Market Admin

 Web Dev & Int. trading

 Network Local Com

 Network Distance Com

 Application Support

 Hardware Support

 Back Office Dev.

Finance Division

 General Accounts

 Clearing Accounts & Exchange DP

 Special Clearing

 DSE FSDP

Administration Division

 Board Affairs

 Membership Affairs

 HRM, Administration & Training

 Protocol, Logistics & Maintenance

 Publication & Public Relations

 Resources & Development &Library

 Security Section

 Reception

 Legal

Operation Division & CEOs Secretariat Surveillance

 Surveillance

 Internal Control & Audit

 Monitoring, Investigation & Legal Affairs

 PS of CEO

 Listing Affairs & Market operation

2.11 DSE Website

DSE has been introduced a data integrated website www.dsebd.org with real time market data where an investor can get basic information of all listed companies as well as associated trading information on securities arena.

2.12 Organogram Of DSE

ORGANOGRAM OF DSE

Board of Directors

CEO - Chief Executive Officer Internal Audit, Control & Compliance Committee

CTO-Chief Technical Officer

ICT Division

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Finance Division

CFO-Chief Financial Officer

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CHAPTER-3

3.1

Capital Market

Sources from which long-term capital is raised for the setting up and sustained growth of companies. The Stock Exchange is a part of the capital market, not only because it readily provides money for new or existing ventures, but also because it helps investors to trade in their shares and maintains the liquidity of investment. Investment in further public and rights issues, convertible and non-convertible debentures, there the resources they need.

A market in which long-term capital is raised by industry and commerce, the government and local authorities. The money comes from private investors, insurance companies, pension funds and bank and is usually arranged by issuing houses and merchant banks. Stock exchanges are also part of the capital marketing that they provide a market for the shares and loan stocks that represent the capital once it has been raised. It is the presence and sophistication of their capital markets that distinguishes the industrial countries from the developing countries, in that this facility for raising industrial and commercial capital is either absent or rudimentary in the letter.

3.2 Primary Market

Primary market comprises of a market for new issue of shares, and debentures, where investors apply directly to the issuer/company for allotment & pay application money to the issuer‟s/company account. Primary market is where a issuer /company makes its contact directly with the public at large in search of capital distinguished from the secondary market. Where investors buy /sell listed shares on the stock exchange.

3.3 Secondary Market

Secondary market comprises of the buyer and seller of shares and debentures subscribed to the share or debenture of the company. If one wishes to sell the same, it will be done in the secondary market similarly one can also buy the shares or debentures of a company from the secondary market (if the company is listed on the stock exchange) without having to wait for the company to come out with a new public issue.

3.4 Securities And Exchange Commission

The Securities and Exchange Commission (SEC) was established on 8th June 1993 under the Securities and Exchange Commission Act, 1993. The Chairman and Members of the Commission are appointed by the government and have overall responsibility to administer securities legislation. The Commission, at present has three full time members, excluding the Chairman. The Commission is a statutory body and attached to the Ministry of Finance.

3.5 DSE Ranked Fourth Best Performing Exchange In The World

While the global stock markets have taken a beating, the DSE has performed reasonably well. According to Bloomberg, the New York-based prestigious information services company, the DSE was the fourth best performing exchange in the world on a currency-adjusted basis in 2008. According to the 23 world indices, the Dhaka Stock Exchange has performed the best in comparison with the other important stock exchanges. I, therefore, congratulate all of you for the resounding success.

I also congratulate the new government elected by the peoples of Bangladesh and I hope our securities market will see further growth during the tenure of the new government which assumed office on January 6,2009. The new government will hopefully stress the need for raising funds from the securities market, which will ultimately help industrialization of the country as well as mobilization of internal resources.

We firmly believe in teamwork and excellent loyal, efficient and motivated team of employees is our harmonious strength. With a firm commitment to achieve an excellence in service, DSE has always tried for creating wide array of products and offer superior value proposition. To strengthen our technological platform, we have already installed state of the art technology.

The resounding success that we have achieved last year was possible because of your relentless support to the DSE. Our commitment to you for making your investment to have an ever-increasing value has made possible to reach a commendable level of success.

Securities market as a vital sector of the national economy continues to be very important particularly in the backdrop of keen competition and continuous globalisation process. We play a crucially important role in creating employment through investment.

3.6 Market Development

DSE continued its efforts to develop the market through taking various reforms and programmes throughout the year. Since the inception of the DSE Training Academy on September 10, 2007, many training programmes for investors, authorised representatives, seminar on Derivatives, Financial Options and Futures for DSE officials and professionals took place during the period. Apart from DSE head office, many brokers and institutional investors are arranging awareness programmes in the newly opened Training Academy. Honorable Adviser to the Caretaker Government Dr. A.B Mirza Md. Azizul Islam inaugurated the DSE Academy aiming to help create a pro-active atmosphere in the securities market and thus build up a strong human resource for the growing market. Removing the prevailing weakness in fixed IPO Shares Pricing Method, DSE has been closely working with SEC to introduce Book-Building, alternative method of share price valuation. Under this method entrepreneurs will be encouraged to get their business ventures into the bourses as it will ensure them expected level of price of their shares. DSE as part of spreading awareness about the Book-Building method to extract time-bound opinion from the experts in Financial Markets including regulators and Academics arranged a workshop on “Book Building Method” on February 17, 2008 at its Boardroom. SEC Chairman Mr. Faruq Ahmad Siddiqi was the chief guest of the function.

It is assumed that after the introduction of proposed Book Building Method profitable and fundamentally sound companies will come forward to the capital market. Direct listing of Jamuna Oil Company, Meghna Petroleum Ltd, Titas Gas Transmission and Distribution Co. Ltd, ACI Formulations and Shinepukur Ceramics fulfilled the investors‟ demand in the securities market. Of them, ACI Formulations and Shinepukur Ceramics were the first private companies to get direct listing. In another development DSE arranged investors‟ awareness programme of home and abroad during the year. To attract the Non-Resident Bangladeshis‟ investment in Australia to the country‟s capital market, a DSE delegation

visited two major cities in Australia in April 2008. Meanwhile, DSE arranged a roundtable titled „global financial crisis and its impact on financial markets in Bangladesh‟ at Sonargaon Hotel in Dhaka on November 15,2008. Securities and Exchange Commission Chairman, Mr Faruq Ahmad Siddiqi was the chief guest in the programme while Deputy Governor of Bangladesh Bank Mr Ziaul Hasan Siddiqui was the special guest. DSE Senior Vice-president Mr Saiful Islam chaired. Mr MA Baqui Khalily, Professor of Department of Finance and Chairman of Centre for Corporate Governance and Finance Studies of Dhaka University presented a keynote paper. DSE also arranged the Second Conference of South Asian Federation of Exchanges (SAFE) during January 31 and February 01 in 2008 in Dhaka. The then Finance and Planning Adviser, Dr. A.B Mirza Md. Azizul Islam inaugurated the 2-day conference. While inaugurating the programme the Finance Adviser emphasised on joint and coordinated effort for strong and vibrant securities market. Top management officials including the CEOs of member exchanges from the SAARC regions participated the conference.

3.7 Surveillance Of DSE

The main objective of the Surveillance function of the Exchange is to promote market integrity in two ways

- By monitoring price and volume movements (volatility) as well as by detecting potential market abuses at a nascent stage, with a view to minimizing the ability of the market participants to influence the price of the scrip/scrips in the absence of any meaningful information.

 By managing default risk by taking necessary actions timely.

Market Abuse is a broad term, which includes abnormal price/volume movement, artificial transactions, false or misleading impressions, insider trading, etc. In order to detect aberrant behavior/ movement, it is necessary to know the normal market behavior - The department carries out investigation, if necessary, based on the preliminary examination/analysis and suitable actions are taken against members involved based on the investigation.

All the instruments traded in the market come under the Surveillance umbrella of DSE. Surveillance activities at the Exchange are divided broadly into two major segments

- Price Monitoring: Price monitoring is manly related to the price movement/ abnormal fluctuation in prices or volumes etc.

 Position Monitoring: The position monitoring relates mainly to abnormal positions of members, etc. in order to manage default risk.

3.7.1 Price Monitoring

The functioning of the Price Monitoring is broadly divided into following activities –

3.7.1.1 Investigations

Conducting in-depth investigations based on preliminary enquiries/analysis made into trading of the scrip. In case of irregularities observed, necessary actions are initiated or investigation case forwarded to SEC, if necessary through the CEO.

3.7.1.2 Surveillance Actions

 Warning to Members

The department may issue verbal/ written warning to member/s when a market irregularity in the scrip is suspected.

 Imposition of penalty/ suspension

The department, through the CEO, imposes penalty or suspend the member/s who are involved in market irregularities, based on the input/ evidence available from

investigation report.

3.7.1.3 Rumor verification

 Liaising with Compliance Officers of companies to obtain comments of the company on various price sensitive corporate news items appearing in selected News Papers.

 Comments received from the companies are disseminated to the market by way of online news bulletin.

 Investigations based on rumor verifications are carried out, if required, to detect cases of suspected insider trading.

3.7.2 Position Monitoring

The Surveillance Department closely monitors outstanding exposure of members on a daily basis. For this purpose, it observes various off-line and on-line market monitoring reports. The reports are scrutinized to ascertain whether there is excessive purchase or sale position build up compared to the normal business of the member, whether there are concentrated purchases or sales, whether the purchases have been made by inactive or financially weak members and even the quality of scrips is considered to assess the quality of exposure.

3.8 Market Expansion

DSE opened its office in Sylhet on March 30, 2008. SEC Chairman Mr. Faruq Ahmad Siddiqi inaugurated the office. DSE is also working to open its branch offices in Khulna and Rajshahi to fulfill the demand of the investors across the country. We are in progress to establish four branch network offices in Dhaka.

3.9 Technical Development

Considering recent market growth, the Automated Trading Server was upgraded twice during 2008. Firstly it was upgraded from HP NonStop S7802 to HP NonStop S7804 by adding 2 CPU during March 2008 and the capacity was upgraded from 50,000 trades per day to 1,00,000 trades per day. The total Trader Ids supported by the upgraded System was 3000. This highly scalable Trading Server was further upgraded to HP NonStop S7806 by adding another two CPU on December 21, 2008. The new HP NonStop S7806 is capable to handle approximately 1,50,000 trades per day. WAN (Wide Area Network) setup was further expanded by incorporating another three vendors (Network Service Provider) along with existing three vendors. Presently more than 165 Member firms are operating trading

activities approximately from 480 remote locations of 14 districts. Two DSE Branch offices were running very smoothly at Chittagong and Sylhet. We are in progress to establish two new DSE branch offices at Khulna and Rajshahi as well as DSE network branches in Dhaka. Besides providing online trade data from MDS (Market data server) to DSE official website, Mobile phones, ETV, etc, DSE is in process to provide DSE online trade data to many renowned national/international companies like Bloomberg, Mubasher Trades and to some of the online edition of the national print media.

3.10 Global Economy

The global financial crisis of 2008 was the worst of its kind since the Great Depression of 1930s. It became prominently visible in September, 2008 with the failure of several large United States-based financial firms. The underlying cause of the financial instability was the sub prime mortgage crisis.

The financial crisis began in July 2007 (then referred to in the media as a "credit crunch" or "credit crisis"), when a loss of confidence by investors in the value of securitized ortgages in the United States resulted in a liquidity crisis. This prompted a substantial injection of capital into financial markets by the United States Federal Reserve, Bank of England and the European Central Bank. The TED (an acronym of T-Bill and Euro Dollar futures contract) spread, an indicator of perceived credit risk in the general economy, spiked up in July 2007, remained volatile for a year, then spiked even higher in September 2008, reaching a record 4.65% on October 10, 2008. In September 2008, the crisis deepened, as stock markets world-wide crashed and entered a period of high volatility, and a number of banking, mortgage and insurance company failures in the following weeks.

Although America's housing collapse is often cited as having caused the crisis, the financial system was vulnerable because of intricate and highly-leveraged financial contracts and operations. In fact, U.S. monetary policy made the cost of credit negligible, therefore, encouraging high levels of leverage, and generally a "hypertrophy of the financial sector". After affecting banking and credit in the United States, the situation evolved into a global general financial crisis verging on a systemic crisis. Domino effect, as many institutions had

financial links, and also psychological contagions made it spread at the same time worldwide and to many financial and economic areas, including financial markets (stock exchanges and derivative markets notably) where it resulted into a market crash, various equity funds and hedge funds that went short of cash and had to get rid of assets, insurance activities and pension funds, facing a receding asset portfolio value to cover their commitments, incidences on public finance due to the bailout actions, increased volatility for Forex (e.g., currencies of Iceland, various Eastern Europe and Latin American countries).

The Economic crisis of 2008 ensued also in various countries and inflicted various industries, as the financial crisis was a factor for making borrowing and equity rising harder for them. By September 2008, the financial crisis entered into an acute phase marked by bankruptcy of Lehman Brothers and failures of prominent American banks and efforts by the American governments to rescue distressed financial institutions, by passing the Emergency Economic Stabilization Act of 2008. Iceland almost claimed to go bankrupt. Many financial institutions in Europe also faced the liquidity problem that they needed to raise their capital adequacy ratio. European government infused capital into major banks to keep them afloat. As the crisis deepened, stock markets fell worldwide, and global financial regulators attempted to coordinate efforts to contain the crisis. The US government composed a $700 billion plan to purchase nonperforming collaterals and assets. However, the plan was initially vetoed by the US congress because some members rejected the idea that the tax payer‟s money be used to bail out the Wall Street investment bankers. The stock market plunged as a result; the US Congress amended the $700 billion bail out plan and passed the legislation. The market sentiment continued to deteriorate and the global financial system almost collapsed. While the market turned extremely pessimistic, the British government launched a 500 billion pound bail out plan aimed at injecting capital into the financial system. The British government nationalized most of the financial institutions in trouble. Many European governments followed suit, as well as the US government. Stock markets appeared to have stabilized by the end of October 2008.

The year 2008 was perhaps one of the worst years after the great depression of 1930s for a global equity investor. In the first part of the year, the global credit crisis took its toll and

equity prices had started to fall. In the later months, when it was evident that the world was heading for a recession, stock prices started to plummet like a sack of potatoes. According to the Economist, the UK-based prestigious magazine, “American mutual-fund assets have declined by USD 2.4tn - a fifth of their value - since the start of 2008; in Britain, the drop is more than a quarter, or almost BP 130bn (USD 195bn). The value of global stock markets has shrunk by USD 30tn, or roughly half. These figures put the losses on credit-related securities, where the financial crisis began, into the shade”. Indeed, it was a bad year for equity investors.

3.11 Bangladesh Economy

Bangladesh economy grew 6.2 per cent during the year 2007-08 as compared to 6.4 per cent in 2006-07. The economy performed well overcoming the damage and dislocation caused by the two floods and the cyclone SIDR. Nearly all sectors contributed to the GDP growth, particularly export-oriented sectors, remittance and also some service sectors like transport and communications. Inflation which rose to 9.8 per cent from 7.2 per cent in 2006-07, was caused mostly by the increase in international prices of energy, food grains and fertilizers. In FY2008, economic performance was better than expected considering the effects of natural disasters in the first half of the fiscal year and higher international commodity prices. The recovery in agriculture and services and the rebound in exports in the second half contributed to the reasonable 6.2% growth of GDP. Growth was supported by a steady flow of bank credit and a surge in workers‟ remittances. The economy during the year witnessed a rare achievement when the National Board of Revenue (NBR) for the first time achieved the target to earn Tk 374.79 billion as revenue. Agriculture grew at 3.6% in FY2008, after recovering from losses caused by the two floods and the cyclone in the first half of the fiscal year. The recovery was led by a bumper boro (harvested in Spring) crop helped by good weather conditions and timely Government support. Potato and wheat production also fared well. Industry sector growth in FY2008 declined to 6.9% from 8.4% in FY2007.

3.12 The Global Stock Market

MSCI International Equity Indices are the most widely used global benchmarks in the industry. They are used to benchmark more than an estimated USD 3tn in assets, by over 2,200 institutions globally and for over 90% of all international equity assets under management in the US. Calculated since 1969, the indices have become integral tools in the investment process of international investors and are used for research, in asset allocation models, to benchmark and conduct performance measurement analysis. Worldwide stock markets performed poorly. In many regions, the drop in some equity values were in excess of 50%, and all the indices lost more than one-third of their value.

Notwithstanding intermittent volatility, decline was observed in almost all major stock markets during 2007-2008. The Dow Jones composite Index and the New York Stock Exchange (NYSE) composite index of USA witnessed decrease at the end of June 2008 as compared to those at the end of June 2007. Similar trends were observed with regard to Nikkei 225 (Tokyo, Japan) Composite Index (Kuala Lumpur) & Straits Times Index (Singapore). Only Hang Seng Index (Hong Kong) closed on high notes. South Asian stock markets also witnessed volatility, but closed on low notes. During the said period, however, general index of DSE in Bangladesh showed an increase by 39.60 percent.

The following table shows the price trends in the major stock exchanges of the South Asian Region:

3.13 Bangladesh Stock Market

3.13 Bangladesh Stock Market

In absolute terms, Dhaka Stock Exchange had a mixed year. In the first half of the year, the stock exchange went up significantly. This rise was due to a number of factors. The year end for banks and other financial institutions is December. They started to declare their results in the first few months of the year. As their results came in, and the results were very healthy,

these stock prices started to go up, which was reflected in the rise of the index. The role of regulation cannot be ignored here. It was expected that reforms would take place in the non-bank financial institutions, and the insurance sector, which spurred the sharp rise in prices in these sectors. The banks were already expected to give heavy stock dividends as a requirement to be compliant with Basel II. All these factors meant that the index was on the up.

The second half of the year was a time of decline. True that the stock and cash dividends were adjusted, however, the correction in the stock prices was much larger. There is little dispute that the market had been overheated in the first six months, and a correction was long overdue. At the same time, some other factors also started to concern the retail investors. Retail investors started to worry about the foreign portfolio investors pulling out their money as they did in Russia, India, China, and many other countries. The news coming from the developed and the developing world about the ramifications of the credit crunch and the overall downturn in the global economy exacerbated their fears. At the same time, the uncertainty about the political situation started to put off investors in investing money in the bourses. Also, the second half of the year celebrated two major religious festivals, which is generally a slag time for investors. All these factors culminated into the down turn in the second of the year.

However, in the last month of the year, we find retail investors again finding interest to invest. A large part of this renewed interest can be attributed to the prudent actions of our regulators and the media. They rightly stressed that the current credit crunch in the global economy will not impact us greatly as we are not that leverage, and complex instruments do not exist here. They also rightly stressed that; the global recession will not affect us in a large way, as our economy is largely insulated from the negative aspects of the downturn.

While the global stock markets have taken a beating, the Dhaka and Chittagong stock exchanges have performed reasonably well. According to Bloomberg, New York- based information Services Company; the DSE was the fourth best performing exchange in the world on a currency-adjusted basis in 2008. According to the 23 indices, the Dhaka Stock Exchange has performed the best in comparison with the other important stock exchanges.