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Angry Bangladeshi investors stage a demonstration and shout slogans in the commercial area of Dhaka on May 9, 2011.
Munir Uz Zaman

DHAKA, Bangladesh — Even amid the gloom of the American recession, it’s hard not to spare a thought for the Bangladeshi stock investor.

In December of last year, the country’s main stock market imploded, gobbling up the portfolios of more than 3 million small traders. Many had sunk their life savings into the Dhaka Stock Exchange (DSE), hoping to reap a quick profit, but the crash left them penniless and enraged.

After the DSE lost 9.25 percent of its value in less than an hour on Jan. 10, investors swarmed into the streets, smashing cars and setting tires alight. Since then, sporadic protests continue to plague Dhaka’s traffic-choked commercial district.

Like the Occupy Wall Street movement in the United States, Bangladesh’s protesters say they are railing against corporate greed and malfeasance, blaming bankers and financial industry “big shots” for recklessly triggering — and profiting from — the financial catastrophe.

Indeed, Bangladesh’s stock market crash bears many of the hallmarks of the 2008 US sub-prime mortgage drama: an overheated market, irresponsibly easy access to credit and, some say, a suspicious lack of regulatory oversight on the part of financial authorities.

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Many investors still harbor barely concealed anger towards the company heads and “insiders” at the DSE and at the central Bangladesh Bank who they say profited from the crash.

Maulana Abul Hasan, 35, a stock investor since 2004, said the last nine months had wreaked havoc on his portfolio, which has shrunk from a peak of 6 million takas ($78,600) in value to between 800,000 and 1 million ($10,480-$13,100), depending on the day.

“We are undone. The prime minister might as well just put a bomb here and kill us all,” he said on the third floor of the musty DSE building, as other aggrieved investors gathered to offer their own stories of financial woe.

“The big investors lured people to invest in the stock market and then sold every stock,” said 30-year-old Mainul Islam, who plowed a 1 million-taka ($13,100) gift from his parents into stocks, hoping to raise some quick cash for a trip to Europe. “They’re playing a mysterious game right now,” he added, drawing on a cigarette.

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When not occupying the streets, many aggrieved investors occupy Dhaka’s hundreds of small brokerage houses, eyes glued to computer monitors, still hoping for a spike in the value of their portfolios.

Mohammad Abadrul Islam, a 37-year-old office supplies salesman who lost 400,000 takas ($5,240) in the crash, said he still owes 250,000 takas ($3,275) in loans he took out to buy the shares, and returns each day just in case the situation improves. “I can’t make any money out of it,” he said of his investment. “I’ll be happy just to pay off the debt.”

Of the nine traders who spoke to GlobalPost, only Eugene Corraya had come out on top. Drinking tea inside a dingy brokerage office on the fifth floor of the DSE building, the 46-year-old said he invested 2 million takas ($26,200) and had earned half that again in profits.

But even he recognized he was among the lucky few. “Ninety percent are losing, just 10 percent are making money,” he said. “And those 10 percent are the big players.”

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From 2007 to 2010, as the global financial crisis reverberated through the Western markets, the DSE seemed like an island of easy profits in an ocean of red ink. Its index leapt from 2,450 in February 2009 to an unprecedented 8,600 by the end of 2010, and the number of investors in the market doubled from 1.5 to more than 3.3 million.

Asif Anwar, an independent financial analyst based in Dhaka, said a stock trading “mania” took hold as stock prices rose well beyond their underlying value. He said the boom was encouraged by the easy access to credit and the expansion of brokerage houses outside the capital, which fueled an epidemic of “pure, uncontrolled greed” and drew hundreds of thousands of new investors into the market.

“Everybody was talking about the stock market. Everybody became an analyst overnight,” he said.

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Few of these new investors, however, understood the risks of stock trading. When the inevitable bust came, triggered by a hike in interest rates and the central bank’s enforcement of capital exposure regulations, banks and company directors quickly sold out to avoid losses, reaping massive profits and leaving the newcomers high and dry.

“The big-shots — the company directors, banking companies — they made the money out of the pockets of these 33 lakhs,” said Abu Ahmed, an economist at the University of Dhaka, referring to the 3.3 million investors he says lost out in the crash.

Ahmed argued that government regulators did little to restrain the popular mania for the stock market.

The Securities Exchange Commission (SEC) — which plays an equivalent regulatory role to its US namesake — should have vetoed the expansion of the brokerage houses, he said. It should also have been more vigilant about financial manipulation by listed companies, some of which served up bogus financial reports and issued thousands of overpriced bonus shares to cash in on investor enthusiasm.

“The SEC should be put in the dock,” Ahmed said, “not the ordinary Mr. Tom, Dick and Harry.”

But Mohammad Shakil Rizvi, the president of Dhaka Stock Exchange Ltd., said small investors were as greedy as the big players, demanding the expansion of brokerage houses.

“The people don’t know about the stock market — they have no idea. The confidence level was too high, the crowd was coming to Dhaka and pressuring the brokerage houses,” he said. Rizvi denied regulators had failed in their duties, saying that little could be done to rein in the irrational exuberance of the common investor.

Despite the recent establishment of a 50 billion-taka ($655 million) rescue fund to lure investors back into the market, Anwar said the system required a more thorough reform.

“Clearing out the system and bringing about efficiency in trading, transparency, corporate governance, disclosure, clamping down on insider trading — none of this is being done,” he said.

The "Occupy Dhaka" protesters are also unimpressed with the government’s actions and have promised more disruptions.

Mizanur Rashid Chowdhury, president of Bangladesh Sharemarket Investors Unity Council, which coordinates the protests, announced last month that another public rally will be held on Dec. 7 and warned protesters would lay siege to financial institutions including the SEC and Bangladesh Bank.

As in the US, it’s unclear if the financial elites have the will to fix the system.

Investor Mominur Rahman, 42, who lost 1.3 million takas ($17,030) in trades, summed up the powerlessness that has pushed Dhaka’s investors into the streets.

“I don’t support vandalism and arson, but what can we do? Our backs are against the wall.”

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