Making an Investment decision : a study on the Mercantile Bank Securities Limited

Abstract

Capital markets are very important to make a capital or fund for the country from the people lend this fund as loan and advances to the borrowers in different sectors of the industry. Capital Market play a very important role in both national and international trade. This report is prepared for fulfilling a partial requirement of both M.B.A. and the internship program. The report will mainly focus on the Investment decision taken by an investor in Capital Market. It will also focus on operation of Brokerage house. Time is a major limiting factor while preparing the report. The report had to be prepared in these months of my Job experience. There were scarcity of written documents about the facilities and other related things. Much information could not be gathered for the reason of confidentiality. Capital markets are financial markets for the buying and selling of longterm debt or equity‐backed securities. These markets channel the wealth of savers to those who can put it to long‐term productive use, such as companies or governments making long‐term investments. Capital markets are defined as markets in which money is provided for periods longer than a year. Investors commonly perform investment analysis by making use of fundamental analysis, technical analysis and gut feel. Investment decisions are often supported by decision tools. The portfolio theory is often applied to help the investor achieve a satisfactory return compared to the risk taken. The Mercantile Bank Securities Limited has started its Brokerage operation in 29th June, 2009.They help investor to open a BO account and Make an investment decision for buy and sale of shares. For this it provides loan in medium interest rate, less commission and important suggestion with no supervision charges. Recognizing the demand in Trading of the instruments, the MBSL offers a simplified investment decision for increasing Trading finance in Capital Market. For financing Share Market, MBSL is giving different kind of facility, the time these customers will take to relationship –Trade finance (instead of product‐based) gives a further boost to the sector. Capital Market of Bangladesh is passing tough times since December 2010 as high volatility is eroding the capital of Thousands of Investors that might turn into social instability. This fall is caused by many factors which was tried to identify and tried to link up between The Causal factors of market crash and regulatory failure. Primary issue related problems was faulty listing methods and IPO overpricing, few numbers of new listings, revaluating assets before company listing, high premium in issuance of right share/Repeat IPO etc. while secondary market related problems was stock splits and stock price manipulations through block trading, circular trading and insider trading. Investor’s greed and irrational behavior played a big rule to make the stock prices sky rocking as they were crazy to buy shares without judging the company fundamentals. Shares of the companies with closed operations and big accumulated losses were rising constantly due to investors high risk appetite that caused them to loss everything. Government had already taken many steps (including SEC reforms) to stabilize the market but failed as investors confidence is in the bottom level. Government and regulators should work together to identify the main speculators and should brought under proper trial to bring investors back to the market. Regulator should make reforms on Listing procedures and other faulty regulatory frameworks to ensure transparency and efficiency in the capital market and also should bring clear guidelines regarding Private Placements, Asset Revaluation, insider training, Dealing with omnibus account etc. Now a day’s SEC & DSE has taken many steps to correction the market .DSE has started new index system ,new price value of shares .They have also introduced the new implemented system to software which was used by NASDAQ . In this case the markets analysis would be predicted that this will help to implement the share market.