Recent Trends in Capital Market of Bangladesh Critical Evaluation

RECENT TRENDS IN CAPITAL MARKET OF BANGLADESH: CRITICAL EVALUATION OF REGULATION by Syed Golam Shahjarul Alam A thesis submitted in partial fulfillment of the requirements for the degree of Professional Master in Banking and Finance Examination Committee: Dr. Sundar Venkatesh (Chairperson) Dr. Winai Wongsurawat Dr. Yuosre Badir Nationality: Previous Degree: Bangladeshi Master of Business Administration University of Dhaka Dhaka, Bangladesh Bangladesh Bank (Central Bank of Bangladesh) Scholarship Donor:Asian Institute of Technology School of Management Thailand May2012 ACKNOWLEDGEMENTS My greatest Gratitude is given to Dr. Sundar Venkatesh, my project advisor, for his deep insight in capital market, which helped me to accomplish the project paper. His dedication towards teaching, motivating and supervising influenced me greatly, leading to do my project work carefully and seriously. I wish to express my deepest gratitude and appreciation to Bangladesh Bank, My office, for granting me a scholarship, to pursue my Masters in banking and finance.I express my gratitude and deepest appreciation to my friend Ms. Senjuti binte rafiq, My Colleagues in Bangladesh Bank and DSE Library staffs who helped me by providing valuable suggestions and necessary data for my analysis. I am very much thankful to Dr. Winai Wongsurawat and Dr. Juthathip Jongwanich for their valuable suggestions regarding my project. I express my gratitude and deepest appreciation to Ms Kluaymai Thongkham, Ms. Farah Nashid Hossain and other AIT staffs for their effort in creating a homely atmosphere amid the difficult time. i ABSTRACT The 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 that I tried to identify and tried to link up between causal factors of market crash and regulatory failure. Primary issue related problems was faulty list ing methods and IPO overpricing, few numbers of new listings, revaluating assets before company listing, high premium in issuance of right share/Repeat IPO etc. hile 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 Listi ng 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 Trading, Dealing with Omnibus Accounts etc. ii TABLE OF CONTENTS CHAPTER TITLE Title Page Acknowledgements Abstract Table of Contents List of Tables List of Figures List of Illustrations 1 Introduction 1. 1 Background 1. 2 Statement of the problems 1. 3 Objectives 1. 3. 1 Overall Objective 1. 3. 2 Specific Objectives 1. 4 Scope Literature Review 2. 1 Terminology 2. 2 Previous research works on this topic Methodology 3. 1 Data Source 3. 2 Methods Recent Trends of Capital Market PAGE i ii iii iv vi vii viii 1 1 1 2 2 2 2 3 3 10 14 14 14 15 2 3 4 6 7 8 Factors behind recent Capital market Crash in Bangladesh Conclusions and Recommendations Bibliography/References Appendixes 22 35 39 40 iv LIST OF FIGURES FIGURE 2. 1 2. 2 2. 3 5. 2 TITLE Trend of Bombay Stock Exchange-30 (BSE-30) i ndex Trend of DSE General (DGEN) index Trend of SET Index Price Trend of Chittagong Vegetable Oil Ind. Ltd. PAGE 9 9 10 30 v LIST OF TABLES TABLE 2. 1 2. 2 4. 1 4. 2 4. 3 4. 4 4. 5 5. 1 5. 2 5. 3 5. 4 5. 5 5. 6 5. 7 5. 8 5. 9 5. 10 5. 11 5. 12 5. 13 5. 14 5. 15 5. 16 5. 7 TITLE DSE Top five BO Accountholders in 2010 Comparison of DSE volatility with other market Dhaka Stock Exchange (DSE) activities DSE Highest Records Change in total Number of BO Accounts in two Years Detail information of fresh Issues in the DSE during 2009-11 Inconsistency in regulations regarding Margin Loan Price comparison of companies with different per value Price comparison of Mutual Funds with different per value List of some stock split companies and their Market Capitalization Top 10 NAV-gainer companies after asset revaluationsTop Companies offered Right shares with high premium Top Companies offered preference Shares Companies floated shares through Book Building Method Basic Listing Information of Khu lna Power Company Ltd. Basic Listing Information of Ocean Containers Limited.Top 20 Gainers in 2010 Financial Performance of Chittagong Vegetable Oil Industries Ltd Price trends of the stocks of Chittagong vegetable oil Industries Ltd Paired Samples Test One Sample Test Price sensitive information of Chittagong vegetable oil Industries Regulatory Actions displayed in DSE screen Increase of Market Capitalization and Total Turnover PAGE 5 9 17 17 18 19 20 22 23 24 25 25 26 26 27 27 28 30 31 32 32 32 33 39 viLIST OF ABBREVIATIONS AIT Asian Institute of Technology BB Bangladesh Bank DSE Dhaka Stock Exchange SEC Securities and Exchange Commission CSE Chittagong Stock Exchange Report Ibrahim Khalid Share Probe Report FI Financial Institution ADB Asian Development Bank EII Eligible Institutional Investors IPO Initial Public Offerings PER Price Earnings Ratio DGEN DSE General Index vii viii CHAPTER 1 INTRODUCTION 1. 1 Background/Rationale for the thesis Sound Capital Market is an indispensi ble part of an Economy.Without sound and efficient capital market, rapid economic development could be hampered as capital market provides long term funds to entrepreneurs. Capital Market of Bangladesh is still highly speculative and lacks transparency due to poor regulatory framework. In Bangladesh, Financial sector was historically driven by banks and capital market had fewer rules to play as people had mixed perception about the risk pattern in capital market that discouraged them mostly to invest there. But in the mid of ninetieths of last century capital market started to show vibrant behavior that make people interested bout the stock exchanges. As the index was rising sharply and everyone was making money, many people started to invest their money to the heated market that made a bigger bubble and finally the bubble bursts. Benchmark index came down to 700 point in November 1997 from its highest 3600 point in November 1996. Thousands of investors lost their money that made th em reluctant to invest in the capital market again. It took one decade for them to forget the history of collapse. After that, regulators had taken many steps to stabilize the market. Hundreds of new issues came to the market.Central depository, circuit breaker, online trading, etc. were introduced in the market to attract investors. As a result, the market started to grow again. Investors started to forget the history of 1996 and started to invest again. This time most investors were new and young with little knowledge about stocks and did not care about market risk. They invested their money and finally lost everything when the bubble started to burst in December, 2010 that had started to grow from the year 2009. This time Benchmark index came down to 3616 points in early February 2012 from its highest point 8918 in December 2010.Millions of investors lost their money and came down to the street. This is the small picture of stock market crashes in Bangladesh. In both cases regula tors had failed to take proactive measures to not grow the bubble and caused losses for millions of investors when the bubbles burst. When analysts were anxious about the bubbles, regulators were ignoring them and even defended the bubbles. The recent volatility of the capital market of Bangladesh is an abnormal phenomenon and such volatility tends to economic instability. I believe it will be interested enough to look into the causes of the problem.As such volatility affects mass people (many investors), it is essential to try to minimize such volatility by identifying the causes (esp. , Regulatory failure) and solving the problems. In my study, I will try to identify the reasons of this volatility and also to recommend some suggestions to minimize such volatility in future. 1. 2 ? Statement of the Problems As recent volatility raises many questions about the regulatory capability of the SEC, I would like to study whether regulator had any rule to worsen the problem or does it had anything to do at all?In my study, I will try to identify the reasons of recent unexpected events of the capital market of Bangladesh and will also try so suggests some ways to avoid same incidences in the future. Another reason to choose this topic is my present job field. I work for the central Bank of Bangladesh that plays a vital rule for economic development as a regulator. So the learning from this study will help me to identify 1 ? ? ? ? ? future risks associated with both money and capital market and also will make me able to make proactive decisions to prevent the economy from such disasters.As no research is made in this important issue, I believe that my research will be very useful for users. I also believe that regulators (e. g. , SEC, DSE, CSE, Bangladesh Bank) might use my study to strengthen the financial system (esp. , capital market) of Bangladesh. It is unknown whether the recent stock market fluctuation is due to regulatory failure or due to irrational behaviors of investors. Irrational behavior of investors might be an important reason for recent stock market bubble. Patterns of investor’s behavior might be covered by the study.In many cases, data availability might hinder to reach on my objectives. Data related to stock manipulations and insider trading are not available and that’s why I have to rely on secondary sources (if there is any) to conduct my study. Objectives of the Research Overall objective The study will try to identify the rule of regulators behind the recent capital market crash and focus on developing a road map for promoting Sustainable capital market regulatory framework in Bangladesh. Specific objectives 1. 3 1. 3. 1 1. 3. 2 The specific objectives of the study will be: ? To analyze and identify the reasons (Esp. regulatory rules. ) for recent stock market crash in Bangladesh. ? To review the existing listing and trading rules in Stock indices in Bangladesh. ? To recommend some guidelines for better regul ations to strengthen the capital market of Bangladesh. 1. 4 Scope This study is focused on the recent trend of the capital market of Bangladesh. The study will explain the regulatory aspects of capital market of Bangladesh on the basis of disclosed regulations and will try to judge the quality of the regulations in terms of its achievement of the goals. This study is basically descriptive in nature.Data is collected from both Primary (Stock Exchange, SEC) and secondary sources like different publications of DSE, Bangladesh Bank, ADB, WB and IMF. Some other research papers in this line will also be used. The areas that will be concentrated are: ? Various aspects of capital market regulations of Bangladesh ? Recent trends of Capital Market ? Bubble creation and Bubble Burst and reasons behind this market collapse 2 CHAPTER 2 LITERATURE REVIEW 2. 1 Terminology To establish the conceptual framework for the research, it is important to provide definitions of key terminologies that are gi ven below: 2. 1. 1 Capital MarketA capital market is a market for both debt and equity securities, where business enterprises and governments can raise long-term funds. It is defined as a market in which money is provided for periods longer than a year (Sullivan et. al. , 2003) 2. 1. 2 Money Market Money market is a segment of the financial market in which financial instruments with high liquidity and short maturities (one year or shorter) are traded. Trading in the money markets involves Treasury bills, bankers' acceptances, certificates of deposit, commercial paper, federal funds, and short-lived mortgage- and asset-backed securities.It provides liquidity support to the global financial system (Frank J. Fabozzi et. al. , 2002). Money market of Bangladesh consists Bangladesh Bank (BB) as the central bank, 4 State Owned Commercial Banks (SCB), 5 government owned specialized banks, 30 domestic private banks, 9 foreign banks and 29 non-bank financial institutions. Moreover, MicroCredi t Regulatory Authority (MRA) has given license to more than 300 Micro-credit Organizations. 2. 1. 3 Stock Exchange A stock exchange is a body that provides services to stock brokers and traders to trade stocks, bonds, and other securities.Stock exchanges also provide facilities for issuance and redemption of securities and other financial instruments, capital events including the payment of income and dividends. Securities traded on a stock exchange include shares issued by companies, Mutual funds, unit trusts, derivatives and bonds. The initial public offering (IPO) of securities (stocks and bonds) is done in the primary market and subsequent trading of it is done in the secondary market. A stock exchange is often the most important component of a stock market. The major functions of Stock Exchanges are: 1.Listing of Companies (As per Listing Regulations). 2. Providing the screen based automated trading of listed Securities. 3. Settlement of trading (As per Settlement of Transactio n Regulations). 4. Gifting of share / granting approval to the transaction/transfer of share outside the trading system of the exchange (As per Listing Regulations 42). 5. Market Administration & Control. 6. Market Surveillance. 7. Publication of Monthly Review. 8. Monitoring the activities of listed companies (As per Listing Regulations). 9. Investor’s grievance Cell (Disposal of complaint by laws 1997). 0. Investors Protection Fund (As per investor protection fund Regulations 1999). 3 11. Announcement of Price sensitive or other information about listed companies through online. 2. 1. 6 Demutualization Demutualization of a stock exchange is the process of transforming a non-profit memberowned mutual organization into a profit seeking shareholder Corporation. Exchanges all over the world have been demutualizing due to increasing international competition and technological challenges to traditional modes of securities trading.The change of a stock exchange from a member-owned organization to a for-profit shareholder corporation triggers a number of questions about regulatory oversight. In Bangladesh, Stock indices are directed by the elected body of stock brokers where conflict of interest happens. There is very poor corporate governance in the Stock Indices that is an important reason of recent debacle (Investigation Report by the Committee). In chapter 2 I discussed about benefits of demutualization that are applicable for the capital market of Bangladesh.As stock dealers and brokers are familiar as institutional investors and play a big rule in the capital market mechanism, they should be regulated properly. In Bangladesh, DSE conduct inspection on brokerage houses and DSE is also run by a selected committee of brokerage house, so one cannot expect proper judgment from the DSE. Table 2. 1 DSE Top five BO Accountholders in 2010 Name Total Annual Turnover (Tk. Billion ) Prime Bank Investment Ltd. 676. 73 IDLC Finance Ltd. 555. 58 LankaBangla Securities Ltd. 525. 33 Trust Bank Ltd. 523. 25 AB Investments Ltd. 497. 33 Sl. 1. 2. 3. 4. 5.From the table, we find that all the top investors are brokerage houses who are mainly monitored by DSE that creates many conflicts of interests. So, if brokerage houses make any big irregularity, DSE is supposed to hide it as it a member of DSE. In 2010, many positive factors along with regulatory supports (SEC, DSE) inflated the market and finally caused big losses for general investors. In case of irregularities (serial Trading, price manipulation) by brokerage houses/members, DSE had failed to make any proper investigation and also failed to inform it to SEC for regulatory actions and favored members.In case of price bidding under book-building method, some members (associated to underwriter of the company) quoted very high and irrational price and DSE listed the securities of these companies without asking any question that rises about the transparency of the listing methods. Without stock excha nge demutualization such conflict of interests could not be avoided. 2. 1. 7 Stock market Bubble A stock market bubble is one kind of economic bubble that takes place in stock markets when market participants drive stock prices above their value in relation to some system of stock valuation. (Smith et. al. 1988) 4Impact of Bubble: There is debate about the impact of economic bubbles among different schools of economic thoughts. Many of the mainstream economists believe that bubbles cannot be recognized in advance, cannot be prevented from forming and attempts to â€Å"prick† the bubble cause financial crises. Instead of pricking the bubble, authorities should wait for bubbles to burst by their own ways, dealing with the consequences via monetary and fiscal policies (Robert E. Wright, 2010). Other economists believe that bubble have negative impact on the economy as it tends to cause misallocation of resources into non-optimal uses.Robert E. Wright, a political economist argue s that bubbles can be identified ex ante with high confidence. In addition, the crash that is caused by an economic bubble can demolish a large amount of wealth and might cause continuing economic depression; this view is particularly linked to the debt-deflation theory of Irving Fisher and elaborated within PostKeynesian economics. An important aspect of economic bubbles is its impact on spending habits. Market participants with overvalued assets tend to spend more because they â€Å"feel† richer (the wealth effect).Many observers quote the housing market of New Zealand, Spain, United Kingdom, Australia and United States in recent times as an example of this effect. Possible causes of Bubble: Low interest rate policies by the Federal Reserve system are believed to have exacerbated housing and commodities bubbles. The housing bubble popped as subprime mortgages began to default at much higher rates than expected, which also coincided with the rising of the fed funds rate. It has also been variously suggested that bubbles may be intrinsic, rational and contagious.To date, there is no widely accepted theory to explain their occurrence. Recent computergenerated agency models suggest that excessive leverage could be a key factor in causing financial bubbles. Some of the causes of economic bubble are given below: Liquidity: One of the possible causes of bubbles is the presence of excessive liquidity in the financial system that induces aggressive lending banks that make asset markets vulnerable. Economic bubbles often occur when too much money is chasing too few assets, causing both good and bad assets to appreciate excessively beyond their intrinsic value to an unacceptable level.Greater fool theory: Greater fool theory says that bubbles are driven by the behavior of highly optimistic market participants (the fools) who buy overpriced assets in anticipation of selling it to other speculators (the greater fools) at a higher price. According to this unsupport ed explanation, the bubbles continue as long as the fools can find greater fools to pay up for the overpriced assets. The bubbles will be ended only when the greater fool becomes the greatest fool who pays the highest price for the overpriced asset and no longer finds another buyer to pay for it at a higher price (Levine et. al. 007) Extrapolation: Extrapolation is the process of projecting historical data into the future on the same basis. If price of an asset have increased at a certain rate in the past, they are supposed to continue to rise at that rate perpetually. It says that investors tend to extrapolate past abnormal returns on investment of certain assets into the future, causing them to overbid those risky assets in order to attempt to capture the same rates of return 5 again. Overbidding on certain assets will at a point of time results uneconomic rates of return for investors and then the asset price starts to shrink (Buchanan and Mark, 2008).Herding: Investors tend to b uy or sell an asset in the direction of the market trend. This is sometimes supported by technical analysis that tries to identify those trends and follow them that creates a self-fulfilling prophecy. Investment managers are compensated and retained in part due to their performance relative to their industry peers. Taking a conservative or contrarian position as a bubble builds results in performance unfavorable to peers that might cause customers to go to competitors and might affect the investment manager's employment and compensation.Moral hazard: Moral hazard is the prospect that a party insulated from risk may behave differently from the way it would behave if it were fully exposed to the risk. A person's belief that they are responsible for the consequences of their own actions is an important aspect of rational behavior. An investor must balance the possibility of making a return on their investment with the risk of making a loss – the risk-return relationship. A moral hazard can occur when this relationship is interfered with, often via government policy.A recent example is the Troubled Asset Relief Program (TARP), signed into law by U. S. President George W. Bush on October 3, 2008 to provide a Government bailout for many financial and non-financial institutions who speculated in high-risk financial instruments during the housing boom condemned by a 2005 story in The Economist titled â€Å"The worldwide rise in house prices is the biggest bubble in history†. Manipulation: Manipulation could be a very important reason of economic bubble. Especially, stock market bubble could be created through stock manipulations.In many developed and developing countries, big investors (Both individuals and Institutional) might manipulate the stock price and could create a bubble. Recent stock market bubble in Bangladesh is mostly caused by manipulations (Ibrahim Khalid stock market probe Report, 2011) Insider Trading: Insider trading also might be a cau se of economic bubble, esp. , in the capital market. Insiders can use the hidden information to take advantage of the undisclosed news from the market and can make the stock price higher than its intrinsic value (Ronald R et. al. 993) Other possible causes of Economic Bubble: Some regard bubbles as related to inflation and thus believe that the causes of inflation are also the causes of bubbles. Others think that bubbles represent an increase over that â€Å"fundamental value† of an asset, which finally return to that fundamental value. Finally, others regard bubbles as necessary consequences of illogically valuing assets solely based upon their returns in the recent past without resorting to a rigorous analysis based on their underlying â€Å"fundamentals†. 2. 1. 8 Omnibus Account Omnibus account is a type of account between two futures merchants (brokers).Transaction of individual accounts is combined in this type of account that allows easier management of portfolio by the futures merchant. But this type of account could be used to manipulate stock as many individual transactions are kept hidden over there. 6 In a recent investigation, it was found that many speculative deals were made through Omnibus accounts of Merchant Banks. Report showed that each Omnibus account consists of 3000-10000 individual accounts and big market players/manipulators used Omnibus Accounts to make speculate stock prices.Even high SEC and Government Officials used the help of Omnibus account to buy and sell share though its prohibited for them to involve invest in the stock market. (Ibrahim Khalid Committee Report) In this case Merchant Bank did not comply with SEC and Bangladesh Bank rules. As per central Bank law, shares of Banks cannot be bought in unidentified accounts but Merchant banks did so in many cases. But SEC never raised any question about such accounts and never made any investigations to dig out irregularities that indicate poor regulations. . 1. 9 Sto ck market crash A stock market crash is a sudden dramatic fall of stock prices across a significant crosssection of a stock market, resulting in a significant loss of paper assets. Crashes are driven by panic as much as by underlying economic factors. They often follow speculative stock market bubbles. Stock market crashes are social phenomena where external economic events combine with crowd behavior and psychology in a positive feedback loop where selling by some market participants drives more market participants to sell.Generally speaking, crashes usually occur under the following conditions, a prolonged period of rising stock prices and excessive economic optimism, a market where P/E ratios exceed long-term averages, and extensive use of margin debt and leverage by market participants (Galbraith, The Great Crash 1929, 1988). There is no numerically specific definition of a stock market crash but the term commonly applies to steep double-digit percentage losses in a stock market index over a period of several days. Crashes are often distinguished from bear markets by panic selling and abrupt, dramatic price declines.Bear markets are periods of declining stock market prices that are measured in months or years. While crashes are often associated with bear markets, they do not necessarily go hand in hand. The crash of 1987, for example, did not lead to a bear market. Likewise, the Japanese Nikkei bear market of the 1990s occurred over several years without any notable crashes. 2. 2 Comparison of recent stock market volatility of DSE with other markets As any sudden dramatic and persistent stock price fall is treated as stock market crash, I believe the recent price fall of Dhaka stock exchange should be called a crash.Recent price fall in DSE was sudden and persistent that caused significant loss of paper wealth and was abnormal in nature compared to other stock markets. If I compare the price trends of Dhaka Stock exchange with other stock exchange I find t he price movement of DSE is absolutely different from other stock markets. Table-22: Comparison of DSE volatility with other market Name of the Index Index Return Std. Dev of index return (Dec’10-Jan’12) (Dec’10-Jan’12) DSE (50%) 11% BSE-30 (14%) 7. 8% SET 55. 62% 5. 84% 7 From the table 2. , we find that during December 2011 to January 2012 Bombay Stock Exchange selected index (BSE-30) felled by 14% while SET index of Thailand increased by 55. 62% during the period while Dhaka Stock Exchange general Index (DGEN) felled by more than 50% during that period, i. e. , DGEN lose its value by 50% during the period that says that this is not simple volatility and it can be defined as a collapse. On the other hand, Standard deviation of index return (a measure of volatility) for BSE-30 and SET index was respective 7. 8% and 5. 4%. But for DSE, the standard deviation of index return was 11% that was much higher than other two indices. DSE index felled sharply duri ng the period from 8200 point (approx. ) to 4000 point (approx. ) and the fall was persisted over a long period. Graph 2. 1 Trend of Bombay Stock Exchange-30 (BSE-30) index Graph 2. 2 Trend of DSE General (DGEN) index Graph 2. 3 Trend of SET Index 8 From the graph 2. 1 we find that BSE-30 index fluctuating over the period in the range of 10000 to 20000 points and showing an increasing trend now.As a result the standard deviation of the index return was 7. 8%. But the BSE-30 index fluctuation is much lower than the DSE general index (Graph-2. 2). Graph 2. 3 gives the trend of SET Index of Thailand that is growing fast and crossed 1000 points from 600 points during the period. Standard deviation of SET index was 5. 84% that is much lower than that of DSE general index (11%). Graph 2. 2 gives the highly volatile and sharply falling index trend of DSE general Index that started to increase from 2600 points in January 2009 and crossed its zenith price of 8600 in December 2010.After climb ing the highest point it started to fall sharply and came down below 4000 in January 2012 less than half of the highest point. From the above analysis we can conclude that DSE index movement was not normal and the fall was so abrupt that it caused huge loss for investors. Especially investors who invested with margin loan lost everything as the index loss was more than 50%. Both BSE30 and SET are facing regular rise and fall while DSE is facing regular and sharp that indicates that the fall was like a stock market collapse and in the later part of the study I will identify this as a stock market collapse. 2. Previous research on this topic Many studies are done around the world to find the reasons of stock market crash and linked with regulatory issues. Recent economic crunch and stock market crash in US motivated economists to conduct in-depth research on it. In Bangladesh many analysts expressed their view regarding the capital market crash but no comprehensive research work is st ill done on it. Government had formed an enquiry team headed by Mr. Ibrahim Khalid, former deputy Governor of the Central Bank to make a probe into the recent activity and to identify the culprits that submitted their report to the government.I am going to discuss the causes of recent Credit Crisis of 2007-2009 and â€Å"Ibrahim Khalid stock probe report† regarding the stock market of Bangladesh in this chapter. 2. 3. 1 Research on Capital Market crash in Bangladesh After the recent catastrophe of capital market of Bangladesh, Government of Peoples republic of Bangladesh had formed a high-powered committee in 2011 to investigate the issue and to give a report to the government within two months. The committee was headed by the ex-deputy governor of Bangladesh Bank, Mr. Khondoker Ibrahim 9 Khaled and the committee was named â€Å"Ibrahim Khaled share market probe Committee†.The committee published a report that was initially kept undisclosed to the general people but la ter on it was disclosed as investors groups and civil society was creating pressure over the government for disclosing it. I will try to summarize the findings of the report in this chapter. Reasons behind the Market Failure: Committee identify following broad factors that caused the capital market disaster recently: a) Primary Issue related Problems: ? Direct listing in Primary issue ? Abuse of Book Building Method of IPO ? High premium for stock listing ? Illegal Private placement market ?Asset Revaluation of Companies before listing to charge higher premium. b) Secondary market related problems: ? Circular trading in Secondary market ? Block trading ? Stock Price Manipulation through Omnibus Accounts ? Most of the market players are identified in the report c) Irregularities in issuance of Right Share/Preference Share/Repeat IPO etc. d) Recommendation of Stock Dividend by companies against unrealized Profits e) Regulatory Failure ? Inconsistency in regulatory activities ? Support ing and legalization of unethical activities of Big Investors ?Irresponsible Behavior/Weakness in many areas ? Formulating policies to support market Players (Manipulators) ? Lack of Due Diligence ? Lack of Co-ordination between SEC and Stock exchanges ? Allowing Financial Institutions to invest in capital market aggressively ? SEC Failed to take measure against manipulation of Financial statements Report says that the burden of this failure should be carried by Securities and Exchange Commission (SEC). Recommendations by the Committee The Committee has recommended some suggestions to the Government to recover the Capital Market from the depression.Major points of their recommendations are given below: a) Restructuring of SEC ? Termination of SEC chief and some other corrupt members ? Comprehensive inspection of their corruption and necessary legal actions ? Recruiting qualified accountants/financial analysts/experts/Talents for SEC ? Increase the remuneration of SEC staff to attrac t talents ? Ensuring integrity of SEC personnel b) Stock Exchange Demutualization: ? Form Committee within DSE to give report regarding demutualization process within 3 months 10 c) d) e) f) g) h) i) j) k) l) m) If DSE fails to give report on time, Government should take steps after 3 months ? Government can take advisory supports from World Bank or any other international organization ? Government can employ an â€Å"Administrator† to DSE to implement the demutualization process. Co-ordination between SEC and stock exchanges for better regulation Capital Market financing by Financial Institutions (FI’s) ? Formulate policy for capital market investment by FI’s in the line of such policies in India and Pakistan ? Take measures against FI’s who are involved with the recent stock market manipulation ?Central Bank should monitor FI’s aggressive stock investment very strictly Formulate clear policy for Pre-IPO placement Ensure transparency in dealing wi th Omnibus Accounts Prohibit share trading by some Government Officials (e. g. , SEC, DSE, CSE, Bangladesh bank , Commercial bank officials) Asset Revaluation by companies should be reviewed by SEC Review the Book-Building Method of IPO Make uniform face-value of all companies Take legal actions against market players/manipulators Government should be more aware about the capital market and they should be free from influence of top market players ( Salman F.Rahman, Rakibur Rahman etc. ) SEC should Open Investors advisory support services to avoid rumor-based trading Conclusion: Committee has made a study on the capital market issues. They specially focused on individual manipulations and regulatory system failure and provided some clear-cut recommendations for the government. I will conduct empirical study on some of the factors to test whether the volatility was due regulatory failure or not. 11 CHAPTER 3 METHODOLOGY 3. 1 Data Source This study is basically descriptive in nature.Da ta is collected from both Primary (Stock Exchange, SEC) and secondary sources like different publications of DSE, Bangladesh Bank, ADB, WB and IMF. Some other research papers in this line will also be used. 3. 2 Analysis Technique/method 3. 2. 1 Qualitative analysis: As my study will try to examine the regulatory aspect in the capital market of Bangladesh, I will focus more qualitative analysis techniques. Quantitative Analysis: In my study, I will also use quantitative techniques to analyze data. Software’s like SPSS, Excel might be helpful for me. 3. 2. 2 12CHAPTER 4 Recent Trends of Capital Market Over the last few years, the capital market of Bangladesh has witnessed a super-normal growth which is not in line of development of real sector of the country. Progress in capital market development has been made possible by, among other things, the central depository system and the automated trading system, a substantial increase in the minimum capital requirement of banks and nonbank financial institutions, lower interest rates on long-term government savings instruments, and an increase in overseas workers’ remittances (Bangladesh Bank, 2011).Increased investors' participation and demand for stocks are fueling price hikes in the market. Other indicators of the capital market also recorded significant growth. Market capitalization of DSE remarkably increased during last three years as reflected in the ratios of market capitalization to the country's GDP at current market price. Market capitalization stood at Taka 2700. 7 billion at the end of FY10 increased by 190. 1 percent from Taka 931. 0 billion of end FY08. The ratio of market capitalization of DSE to GDP rose to 39. percent in end FY10 from 5. 2 percent in FY06 and from 2. 3 percent of FY00. Except for the 13. 1 percent bubble in 1996, the ratio was almost flat at below 3 percent up to FY04. After the 1996's bubble and bust, the market returned to sunny days in the beginning of last quarter FY04 by crossing the index 1100 marked point. After ten years of a flat capital market, the DSE General Index (DGEN) crossed 3000 marked point in December 2007 for the second time. Since the third quarter of FY09, the DGEN gained sharply and it jumped to 8918. 1 in December 2010 increased by 5908. 51 points or 197 percent from the index of end June 2009(3010 points). When the recent past global recession adversely affected the world capital market, sustained rise of price index and daily average turnover of Bangladesh capital market could be seen as a positive sign for the Bangladesh economy. Investment by foreigners in DSE increased during last three years. In FY10, the foreign trade turnover was Taka 18. 7 billion (0. 7 percent of total turnover in DSE) which was 57. 9 percent higher than previous year.Foreign trade was Taka 9. 9 billion (6. 0 percent of total turnover) in FY07 and was Taka 3. 4 billion (9. 7 percent of total turnover) in FY97 (Bangladesh Bank, 2011) Nonetheless, long-term prospects for capital market development are mixed. Although, the Securities and Exchange Commission (SEC) of Bangladesh has tried to correct the abnormal behavior observed in the market, very often it is argued that lack of proper and firm decisions from the regulator’s side has contributed to make the market more unstable rather than stabilizing it.At the beginning of recent Bull Run, Bangladesh capital market was fairly underpriced in terms of Price Earnings Ratio. The market weighted PER of DSE was 11 to 18 during FY04-FY07. PER became to bigger from beginning of FY09 as the acceleration of price index. The PER reached to its peak level at 30. 6 in February 2010 from 18. 4 of end June 2009. The high PER indicates that the market is highly overpriced and overheated. The strong demand from the retail investors, not matched by a corresponding increase in supply of stocks, has caused the PER to rise beyond rational levels.In terms of any measure, Bangladesh capital market is overheated during last couple of years as supply shocks (Bangladesh bank, 2011). 13 The capital market developments and its sustainability depend on market fundamentals at least in the medium term, and the fundamental strength of the market essentially comes from financial strength of the listed companies. Also, strong regulatory environment created and maintained by the regulatory bodies and participation of institutional investors and professional market analysts help orderly market operations.The market witnessed that last few years many fundamental companies with strong financial strength have been listed in the market. The main regulatory body SEC and the Government of Bangladesh and others related regulatory authorities have continued their all efforts to develop the Bangladesh capital market that reflected in the market trends. But growth of market demand for stock was much then that of supply that inflated the market in recent years and made the market most volatil e one in the region.The recent vibrant nature of the capital market also might be due to the increased interest in the market by a large number of individual investors which has been influenced by the government’s decision to reduce the bank interest rates for its different types of savings instrument. Some basic information regarding Dhaka stock Exchange is given below: Table 4. 1 Dhaka Stock Exchange (DSE) activities FY08 FY09 FY10 378 443 450 No. of listed securities 284. 4 457. 9 607. 3 Issued equity and debt (billion Taka) 1044. 80 1903 3508. 0 Market capitalization (billion Taka) 4309. 46 9327. 153 17831. 37 Turnover in value (million Taka) 2795. 00 4535. 30 8290. 50 DSE General Index* ? Year-end close Price, Source-Dhaka Stock exchange FY11 459 618. 51 2616 5598. 52 5257. 50 Table 4. 2 DSE Highest Records Total Number of Trades Total Trade Volume Total Traded Value in Taka(mn) Total Market Capital in Taka(mn) DSI Index Values 389310 242856735 32495. 756 3680714. 195 73 83. 93657 8918. 51346 Date 05-12-2010 21-07-2011 05-12-2010 05-12-2010 05-12-2010 05-12-2010From Table 4. 1, we find that DSE general index, Daily trade value and market capitalization of DSE increased substantially during last 4 years. But number of listed securities remained almost the same during the period that implies that supply side response was less relative to demand side response and market capitalization and index increased due to increased demand for securities and scarcity of good securities. Nature of Investors: At the end of 2010, total number Beneficiary Owner (BO) Account stood at 3. Million (DSE Data). Out of that a big number of investors did not have sufficient knowledge about securities trading and most of them were relying on rumors spread by big investors. Information of BO accounts of last 3 years are given below: Table 4. 3 Change in total Number of BO Accounts in two Years Date 01. 01. 2009 30. 06. 2009 31. 12. 2009 Total No. of BO A/C 14,68,500 14,19,019 1 9,20,602 Change (+/-) -(49481) 5,01,583 14 30. 06. 2010 31. 01. 2011 25,70,654 33,79,719 6,50,052 8,09,065From the table we find that most of the BO accounts were opened during June ’2009 to January ’2011 that indicated that more than half of the investors could be treated as new investors. During 2009, stock exchanges, Institutional investors and SEC make many campaigns within and outside the country to attract new investor that seems to be successful as the BO accountholders was doubled in last two years that might be treated as a potential for market development. But due to scarcity of new securities market price increased substantially.This demand-supply mismatch along with inadequate investor’s knowledge made the stock prices in a new height and finally turned into a big depression that is still going on. Recently listed Companies with financial information: Twenty three companies (including three direct listing companies) raised new equity of Taka 18. 2 bi llion in the capital market in FY10, higher than the Taka 5. 9 billion raised by the sixteen companies in FY09. Of the new equity issued, Taka 5. 3 billion raised through private placements and Taka 12. 9 billion raised through public placements against Taka 0. billion raised through private placements and Taka 5. 0 billion through initial public offerings (IPO) in FY09. The volume of public offerings in FY10 was oversubscribed more than nine times indicating the high demand of new securities in the primary market. Bonus shares valued at Taka 27. 6 billion were issued in FY10 by one hundred and twenty one companies against retained profits, higher than the Taka 16. 2 billion issued in FY09 by ninety one companies. Currently 493 securities (Debt and Equity securities) are being traded in Dhaka stock exchange. Few numbers of companies are making fresh issue every year. 3, 18 and 10 companies listed their securities respectively in 2009, 2010 and 2011(up to July). Traditionally DSE use d fixed price method for flotation of new companies. But fixed price method does not attract good companies always. So, to attract new companies, SEC decided to introduce Book building method that is a globally acceptable method for IPO. But in Bangladesh, Book Building method is handled very roughly that caused loss for millions of investors. Detail information of securities floated in the market for last 3 years are given in table 4. 4. 15 Table 4. Detail information of fresh Issues in the DSE during 2009-11 Book Value 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 100 10 10 10 10 100 100 10 10 10 100 10 10 10 100 100 10 10 10 100 100 100 10 Issue Price 111. 6 127 10 10 10 60 10 10 10 10 10 10 10 10 10 10 10 25 100 10 10 10 48 120 100 10 10 10 100 10 20 70 100 100 10 90 10 100 100 250 10 Opening Price 134 145 12. 7 10 10. 2 73 68 10. 8 9. 5 74 9. 6 136 9. 3 10. 9 12. 6 11. 4 89. 2 89 235 12. 7 12. 9 16. 5 208 799 514 28. 6 23. 5 27 559 25 57 177 462 261 63. 1 325 35. 5 1955 405 784 71. 6 1st day return 20. 07 14. 7 27. 00 0. 00 2. 00 21. 67 580. 00 8. 00 -5. 00 640. 00 -4. 00 1260. 00 -7. 00 9. 00 26. 00 14. 00 792. 00 256. 00 135. 00 27. 00 29. 00 65. 00 333. 33 565. 83 414. 00 186. 00 135. 00 170. 00 459. 00 150. 00 185. 00 152. 86 362. 00 161. 00 531. 00 261. 11 255. 00 1855. 00 305. 00 213. 60 616. 00 1st Month close Price 140 190 10. 5 9. 2 8. 5 65 48 9. 5 9. 8 61 9. 5 130 10. 2 10 11. 4 10. 5 85. 2 85 620 12. 4 12. 7 16 170 740 506 24. 2 20. 6 20 619 27 60 171 511 180 59 451 31. 5 1667 470 762 46. 9 1st Month return 25. 45 49. 61 5. 00 -8. 00 -15. 00 8. 33 380. 00 -5. 00 -2. 0 510. 00 -5. 00 1200. 00 2. 00 0. 00 14. 00 5. 00 752. 00 240. 00 520. 00 24. 00 27. 00 60. 00 254. 17 516. 67 406. 00 142. 00 106. 00 100. 00 519. 00 170. 00 200. 00 144. 29 411. 00 80. 00 490. 00 401. 11 215. 00 1567. 00 370. 00 204. 80 369. 00 1st year close price 70 71. 9 8. 3 8. 6 8. 7 35. 1 23. 5 7. 7 9. 5 29. 3 5. 4 77 7. 2 7. 4 8. 1 7. 4 41 70 510 8. 7 9. 4 14 103 2 646 1197 16. 1 17. 5 17 800 17 102 245 604 156 73. 1 672 17. 5 2497 838. 5 1721 29. 8 Yearly return -37. 28* -43. 39* -17* -14* -13* -41. 5* 135* -23 -5 193 -46 670 -28 -26 -19 -26 310 180 410 -13 -6 40 114. 8 2105 1097 61 75 70 700 70 410 250 504 56 631 646. 67 75 2397 738. 5 588. 4 198 year 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 Issue Name M. I. Cement MJL BD Ltd. Reliance MF EBL NRB MF SEBL 1st MF Barkatullah Electrodes Salvo chemicals MBL MF AIBL MF Deshbandhu polymer PHP MF Active Fine Chemicals IFIL MF Popular MF Janata MF Green delta MF Beacon Pharma Malek Spinning United Air ICB 3rd MF Phoenix MF IFIC MF RAK Ceramic Dhaka Insurance R.N. Spinning DBH 1st MF Prime Bank 1st Icb MF Trust Bank MF Provati Insurance ICB employees MF Goldenson (RPO) Grameen Phone Ltd. Islami Insurance ICB AMCL MF Dacca Dying MARICO BD L td. EBL 1st MF Rupali Life insurance Asia Insurace Bay Leasing Prime Finance 1st MF From the table it was found that many of the new issues were overvalued and lost value in fast few month that are contrary to traditional ideas regarding IPO.Most of such losing stocks were listed through Book building method where it was assumed that premium value for new stock was much higher than the intrinsic value and after listing in the market these stocks reached on their fundamental value. Actually this is an example of overpricing of IPOs in Bangladesh that caused bubble in the market. 16 CHAPTER 5 Empirical examination of three problems identified by Ibrahim Khalid committee In recent years, Bangladesh capital market witnessed both bullish and bearish trends caused by irregular fluctuation in the indices due to various reasons.In this chapter, I will try to identify some reasons/factor that caused such irregular cycles or stock market crash in Bangladesh. 5. 1 Changes in Face Value (Stock Split) of Securities: There are several theories that explain the reasons of stock split by companies. The most common reasons are to achieve an optimal price range for liquidity, to achieve an optimal tick size and to signal the confidence of managements’ in the future stock price. Various studies on stock split and market behavior shows that there are stock price might lead increase in stock price and trade volume in the short term (Aduda and Caroline. 2010).Copeland (1979) noted that a stock split changes stock prices to a more optimal price, which in turn increased demand for the stock. Their hypothesis of the optimal price range stated that there was a price range within which trading was most liquid for stocks of a company. Baker and Powell (1993) noted that the main motivation for the executives to split stock was toward improved liquidity. High-priced stocks found to be illiquid due to the psychological reasons and transaction costs. Therefore, when the prices climbs up to a certain level, the executive splits the stock to lower prices which facilitates trading and enhance liquidity.Benartzi et al. (2005) argued that management splits their stocks only if it considers the current level of stock price and earnings to be persistent. In Bangladesh, price of small face value (Tk. 10) securities are relatively higher then big face value (Tk. 100) securities where other things remain the same. By May 2010, SEC instructed all companies to convert the face value of securities to Tk. 10 from various per values that increased price level of Tk. 10 share substantially that inflated both the individual stock price and indices. During the period of 2009-2010, 62 companies had changed their face value.Some of the examples are given below with pairs: Table 5. 1 Price comparison of companies with same fundamentals but different per value Items EPS-2009 (Tk. ) NAV-2009 (Tk. ) (floating share (%)) Dividend-2009 Price-30/12/09 Price-30/12/10 1. Union Capital (Par value- 2. BIFC (Par value- Differences(1-2) 10) 100) 3. 90(39. 00) 34. 35 15. 60(156) 153 417. 5 Million (21%) 359. 0 Million (22%) 30%B 10%C, 12%B 116. 50(1165) 323. 00 246. 80(2468) 1117. 00 Market Return (31/12/09-31/12/10) -4. 65 +3 +58. 50 +8% TK. 842 (+360%) TK. 1351 (+221%) 82% Table 5. 2 Price comparison of Mutual Funds with different per value Items EPS-2009 (Tk. NAV-2009 (Tk. ) Paid Up capital 1. AIMS MF (Par 2. GrameenMF(Par value-1) value-10) 0. 19(1. 9) 3. 45 1. 91(19. 1) 34. 65 168. 0 Million 170. 0 Million Differences (1-2) -1. 55 -15. 55 -2 17 Dividend-2009 Price-30/12/09(TK) Price-30/12/10 (TK) No dividend was declared that year due to pending case with the court. 13. 83(138. 30) 78. 48 +59. 52(176%) 11. 85(118. 50) 104. 17 +14. 33(114%) From the both table given above that with similar financial condition or weaker financial conditions lower face value companies were overvalued relative to higher face value companies in same industries.This situation was persisting for many years and regulator failed to identify the face value of all listed companies that created some overvalued securities in the market. Investors were eager to buy the securities of these companies that were going to change face and before split price of these were jumping. As an example, National Bank Ltd (NBL) spits its share from Tk. 100 par value to Tk. 10 at 22/09/2010. At that day, the price of those securities was Tk. 823. 00(82. 30) only. But after just two months, price of the securities stood at Tk. 40 (22/11/2011) without any significant change in the company fundamentals. Another example is Prime finance and Investment Companies Ltd. that split the stock in 25 July 2010 when the stock price was Tk. 331. But just after two month (26 July 2010) stock price rose to Tk. 472 and the increase during this two month is almost 43%. So, we might say that change in face value (stock Split) inflated the market and caused an unanticipated bubble in the market. List of some sto ck split companies and their market capitalization are given below: Table 5. List of some stock split companies and their Market Capitalization(Tk. ) Market Capitalization Market Capitalization Change Market Millions Name of the Company (as on 02. 07. 2009) (as on 05. 12. 2010) (%) Adjusted Return (%) NBL Pubali Bank UCBL Uttara Bank ICB Islamic Bank Ltd Eastern Bank Uttara Finance Al-Arafah Islami Bank Prime Bank Southeast Bank Dhaka Bank NCCBL Social Islami Bank MIDAS Finance Standard Bank EXIM Bank People’s Leasing Prime Finance Jamuna Bank Shahjalal Islami Bank Premier Bank Ltd. BD Finance Phoenix Finance First Security Bank Ltd. Automobile Aftab 17093. 5 16979. 24 9544. 65 20777. 12 7946. 52 2475. 00 2475. 00 6687. 61 15747. 27 10584. 51 7324. 53 7511. 61 6762. 96 1560. 80 6953. 95 12498. 38 10172. 48 10172. 48 5100. 82 7583. 21 6889. 42 2039. 68 1059. 30 2768. 4 2768. 41 18 77256. 42 57735. 13 765099. 54 43391. 15 13958. 75 39460. 16 21859. 2 32413. 54 57186. 03 45708. 89 21250. 18 37404. 66 16044. 57 12483. 34 22424. 52 42838. 33 33180. 05 43690. 10 17602. 83 309117. 03 20200. 744 20200. 75 12199. 52 12963. 72 24360. 48 351. 96 240. 03 7916. 0 0 108. 84 75. 65 1494. 3 5 783. 2 384. 68 263. 14 331. 84 190. 12 397. 95 137. 24 699. 0 222. 47 242. 75 226. 17 329. 49 245. 09 3976. 3 3 193. 21 890. 38 1051. 6 5 368. 27 779. 94 2. 5 (30) Not traded in 2009 (150) (147) 4 240 101 (30) (77) (55) (54) (76) 228 (23. 8) (153) 612 263 (103) 45 (62) 273 225 (65) 70 From the table we find that market capitalization of stock split companies increased substantially during that period. Market adjusted returns of these companies were mixed as dividends, Right share issues are not considered here. Stock denomination fixation and Regulatory rules: From the table 4. 5 we find how stock split companies’ shares increased substantially.But such behavior is considered as normal in terms of other markets and cannot be treated as market failure and regulator cannot st op stock split in a stock market. 5. 2 Asset Revaluation: Chainirun and Narktabtee (2008) argued that firms revalue their assets to signal the firms’ growth prospect and liquidity improvement in order to decrease information asymmetry. Sharpe and Walker (2007) revealed that announcements of asset revaluation were associated with substantial upward movement in stock price and these shift in stock price generally sustains in later months.In Bangladesh, companies revalued their assets (Land and other Fixed Assets) that increased their asset value substantially as price of land and all other assets increased sharply that caused increased stock prices in the market. Many factors influenced companies to revalue their fixed assets. Some of these factors are to increase Stock price, to get more credit under NAV-based margin rules, to get higher ratings, to strengthen financial statement and to attain investors confident etc. sample of the companies of top value gainers are listed bel ow: Table 5. Top 10 NAV-gainer companies after asset revaluations Stock Price DGEN the NAV per Share(Tk. ) NAV Before Asset Revaluation After Asset Revaluation Name of Company Change (%) Change during Jan’2009Dec’2010 (%) Change Jan’2009Dec’2010(%) Market Adjusted return (%) Libra Infusions Ltd. 438 15,667 Sonali Ansh Ltd. 297 2,157 Rahim Textile Ltd. 127 785 BD Thai Aluminum 142 566 Ltd. Infusions Ltd. Orion 20 101 Ocean Containers 13 50 Shinepukur 12 26 ceramics Prime Textile 300 633 Eastern Insurance 151 309 BD welding 20 39 electrodesthe company was listed in 2010. As 3472 626 518 298 413 296 120 110 104 95 355 767 641 185 357 Not Applicable* 212% 21 572 162 1001 143 555 429 (27) 145 —(191) 360 (50) 789 From the Table 5. 4 given above, we find that some company gained up-to 1000% after asset revaluations during the period of 2009-10. As there is a clear and direct relationship between asset revaluation gain and stock price growth, I can say tha t revaluation might help the market to grow up faster and also caused much volatility. Many of the company directors sold their shares when the price went to the peak in 2010.But such phenomenon is supported by study and cannot be treated as regulatory failure. 19 5. 3 Issuance of Right/Preference Shares: Companies offer right shares to increase capital base or to meet regulatory capitals. In 2010, 22 companies proposed right shares to existing shareholders valuing 24720 million Taka that almost 17 times than that of 2009 figure which was only 1450 Million taka. Most of the right proposals of 2010 were with a premium price that differed on a range of 10% to 600%. Table 5. 5 Top Companies offered Right shares with high premium Company Name Confidence Cement Co.Ltd. Bay Leasing & Finance Eastern Insurance Co. Ltd. The City Bank Ltd. Phoenix Finance Asia Insurance *Close Price of 1st Trading day Premium Value (Tk. ) 600 250 200 100 100 100 Stock Price on 01/01/2009 (Tk. ) 323. 00 784. 75* 562. 25 432. 50 440. 50 404. 30* From table 5. 5 we find that in January 2009, price of confidence cement co. ltd. was only Tk. 323 but just after one year its right offer price was Tk. 700 (including Tk. 600 Premium) that was approved by the SEC which is a classic example of regulatory silence toward manipulation. Table 5. Top Companies offered preference Shares Company Name Value of Preference Share (Tk. Million) Private Placement Beximco Pharma 4100 63% Sumit Power 3000 69% Aftab Automobile 1800 82% Peoples Leasing 1200 58% BD Thai Aluminum 750 77% In case of preference share, most of them are distributed through private placement where there was no transparency of allocation. Another interesting thing is that, stock price of most of the companies mentioned above increased substantially just after the offerings that increased the greed of investors to make profit through buying right/preference shares of these companies. . 4 Faulty listing methods: In the year 2010, regulator introduced Book building method to attract new companies to the market. Some companies abused this opportunity to exploit maximum benefits from listing that inflated the market. SEC allows companies to float securities through IPO (Fixed Price and Book Building method), Direct Listing and Repeat IPO where Book building method is used mostly in the year 2010. In Bangladesh, following companies used book building method for listing in the capital market: 20 Table 5. Companies floated shares through Book Building Method Name of Company Premium Offer Collected capital value price (Million Tk. ) MJL Bangladesh Ltd. MI cement Ltd. Khulna power company Ltd. Ocean containers Ltd. (OCL) RAK Ceramics Ltd. 142. 40 101. 60 184. 25 135 38 152. 40 111. 60 194. 25 145 48 5690 3050 9600 1600 1310 Market Price (02/02/12) 68. 10 65. 20 43. 20 46. 20 54. 07 From the Table 5. 7 we find that first four companies charged very high premium for its share where and withdrawn huge amount of capital from mar ket.When these companies asked for very high price, shares of other companies of same industry tends to rise on an expectation that it is highly undervalued that increases the general price index. As per the local expert, local media and committee report, Book building method is the most important factor behind the recent stock market volatility in Bangladesh. So we need to study this factor deeply to reach on a conclusion. I would like to describe the implication of price discovery method followed to discover the price of KPCL and OCL here. Khulna Power Company Ltd: Khulna Power Company Ltd. s a power generation company under private ownership that sells supply electricity to consumers through national distribution system. Its security was first traded in 18April, 2010 and price of the securities is being discovered by eligible institutional investors through Book Building system. The company was registered in 15 October, 1997. Its NAV was 17. 09 and 18. 53 respectively for the yea r 2008 and 2009 while EPS was 0. 97 and 2. 79 respectively for the year 2008 and 2009. Other listing related information regarding the company is given below: Table 5. Basic Listing Information of Khulna Power Company Ltd. Khulna Power Company Ltd. Name of the Item Sl. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Face Value Indicative price Offer Price NAV (As of 2009) EPS(As of 2009) Salable Shares Paid Up capital(As of 2009) First day Trade Price(18/04/2010) Trade price after 7 days Trade price after 30 days Trade Price After 1 year Lowest trade price Highest Trade Price(18/04/2010) Taka Tk. 10 Tk. 162 TK. 194 Tk. 18. 53 Tk. 2. 97 5,21,48,250 TK. 208,593,0000 Tk. 273. 60 TK. 270 TK. 207 Tk. 90. 60 TK. 55. 00 Tk. 341 21 Net Asset Value of KPCL was TK. 18. 3 and indicative price was Tk. 162 that is Ten times higher than the asset value of the company. EPS of the company was TK. 2. 79 and before the listing P/E of the security stood at almost 60 that is unusual in respect of other company. Ocean Containers Limited: It is the pioneer for Inland Container Depot (ICD) and Container Freight Stations (CFS) and is the largest privately owned land container port (Off-dock) in Bangladesh. It is located at Patenga Industrial Area of Chittagong on the International Airport road, which is only 6 km from the country’s largest seaport, Chittagong Port.It was listed with DSE in 2010 through book building method. Other listing related information regarding the company is given below: Table 5. 9 Basic Listing Information of Ocean Containers Limited. Sl. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Ocean Containers Limited. Name of the Item Face Value Offer price NAV (As of 2009) EPS(As of 2009) First day Trade Price (04/03/2910) Trade price after 7 days Trade price after 30 days Trade Price After 1 year Lowest trade price Highest Trade Price (04/03/2910) Taka Tk. 10 Tk. 145 Tk. 55 Tk. 3. 73 Tk. 297 TK. 79 TK. 258 Tk. 96. 60 TK. 62 Tk. 2254 From these figures, we find that the maximum price of the stock was Tk. 2254 and minimum price was Tk. 69 only against face value of Tk. 10. The lowest price of the securities was half of the offer price of the securities that indicates that many shareholders caused huge losses out of this security. In both cases discussed above most benefit goes to the owners of the company and both the company are owned by same people. Few institutional investors benefited directly from these two securities.Book Building method for price discovery gives various massages to the market. Some of these are follows: 1. Investors will feel that market is undervalued and they will select instruments that are already in the peak but relatively undervalued if compared to KPCL/OCL. 2. Companies of same industry of which KPCL is operating should go up. Most of the companies of power sector seemed undervalued relative to KPCL as it was overvalued and investors had expectations that price of each company will go to that level that fueled the speculative trend of the market. 3.General Investors had a perception that Eligible institutional investors are technically sound to discover the justified price for a specific stock and th

Mandatory Prenatal HIV Testing Essay - 901 Words

Mandatory Prenatal HIV Testing This particular journal researches prenatal HIV testing as it relates to vertical transmission. Randomized controlled studies involving HIV- positive pregnant women at various stages of pregnancy were monitored and evaluated in an effort to find conclusive reasoning for prenatal testing. Women of different income levels, educational and ethnic backgrounds were involved in these studies. The AIDS Clinical Trials Group Study 076 as well as following randomized controlled trials were used in order to test whether prenatal testing was an effective means of preventing the vertical transmission of the HIV virus. Quick and relatively simple tests were performed in order to first determine whether†¦show more content†¦Statistically, these methods of research produce findings that are typically more accurate than the other various approaches to research. Likewise, the HIV test itself is basically a simple and for the most part accurate means of determining whether a pregnant mother is HIV- positive. The tests were administered to mothers that had already tested positive in order to further ensure the accuracy of the study. In this way, it appears that much time and effort was put forth in order to find conclusive reasoning either proving or disproving the theory that prenatal HIV testing should be mandatory. On the other hand, in order to develop policies that wo uld make prenatal screening mandatory there are two sides to consider; pregnant women who are HIV- positive and pregnant women who do not carry the virus. In this way, the study lacks in including women who must be tested for seemingly no reason. It fails to mention if any undue hardships must be placed upon women who are HIV- negative. Because HIV can be a treatable disease the findings from this study are as most would expect them to be. Early detection leads to an increased likelihood of preventing the viral transmission of the disease. The findings themselves are quite impressive also. If at anytime the spread of a disease can be decreased by nearly 50 % as long as it is detected and treated in a timely fashion, then it is easy to assume that those measures would beShow MoreRelatedEssay about Voluntary Testing for Pregnant Women3201 Words   |  13 PagesVoluntary Testing for Pregnant Women During the past decade, the human immunodeficiency virus (HIV) has become a leading cause of mortality among women. This population is now accounting for the most rapid increase in cases of acquired immunodeficiency syndrome (AIDS) in recent years. As the numbers of cases of HIV infection have increased among women, particularly of childbearing age, increasing numbers of children have become infected as well. Various studies conducted to date indicateRead MoreEssay on Prevention Of Hiv Transmittance To Babies1145 Words   |  5 Pages Prevention of HIV Transmittance to Babies Last year, it was cause for celebration. The cause of celebration was for the results that several clinical trials of zidovudine cut the risk for mother to child transmission of human immune deficiency virus (HIV) by two thirds. Although, this year, it is the basis for new federal recommendations that all pregnant women should receive HIV testing and counseling. But, these findings have been cause of protests by several activist groups. Activists fear thatRead MorePrenatal And Routine Postnatal Hiv Screening1820 Words   |  8 PagesI. Introduction Human Immunodeficiency Virus (HIV) diagnoses are increasing among women in the United States; as a result there is an increase in newborns born with HIV via vertical transmission, accounting for nearly all pediatric AIDS cases in the US. Between 1999 and 2000, about 370 HIV infected infants were born, 40% of which were born to mothers who were unaware of their HIV status before delivery. Without antiretroviral therapy or other forms of intervention, 25% of infected pregnant womenRead MoreHiv Testing in Newborns Essay2981 Words   |  12 PagesThis paper presents an ethical analysis of the mandatory newborn HIV testing law enacted in New York State. The law was passed as an effort to decrease maternal transmission of HIV, by treating infants born to HIV positive mothers immediately after birth with AZT. Newborn testing was promoted by the legislative and medical community following the overwhelmingly positive response from HIV infected pregnant women who were given AZT in the ACTG 076 clinical trials. Pregnant mothers who were givenRead MoreComparing Two Studies On Estimated Hiv Incidence And Prevalence1456 Words   |  6 PagesStudies on estimated HIV Incidence and Prevalence Introduction In the era of HIV global pandemic, estimating incidence and prevalence correctly is critical, as it becomes a strong tool for authorities to decide next action, to mitigate infection rate and its multiple consequences to society. 2 studies investigated HIV estimated incidence from different approaches. Prejean et al studied the incidence estimates in the United States, by using a four-year data obtained from HIV incidence surveillanceRead MoreThe Prevalence Of Hiv Is Higher Among Women Essay2100 Words   |  9 PagesThe prevalence of HIV is higher among women (30%) than men (19%) (Ministry of Health [Lesotho] ICF International, 2014). For both men and women, HIV prevalence increases with age and then declines. HIV prevalence is highest for women at age group 35-39 (46%) and for men at age group 40-44 (44%). Taking employment into consideration, employed individuals in Lesotho have higher prevalence of HIV than unemployed for both men and women. The prevalence among employed men and women is 39% and 23%, respectivelyRead MoreAbortion Is Not A Black And White Issue1242 Words   |  5 Pagesuse somebody’s body without their permission. The Catholic Church and the State of Ireland seem to be leisurely recognizing that abortion is not a black and white issue. The reasons for abortion are vast and complex, and in some cases abortion is mandatory in order to save the life of the mother. By observing abortion as if it were black and white, the State and the Church did not face the reality that the support of comprehensive reproductive healthcare is absolutely necessary. This neglect exemplifiesRead MoreRoad Transport and Traffic System, and Safety Problems in Ethiopia: the Two Decades Experiences2347 Words   |  10 PagesAlzheimers disease 8. Type 2 diabetes 9. Breast cancer 10. Stomach cancer b. The list of major death for low- and middle-income countries 1) Heart disease 2) Stroke 3) Lower respiratory infections 4) HIV/AIDS 5) Fetus/newborn (prenatal) conditions 6) Chronic obstructive pulmonary disease (COPD) 7) Diarrhea 8) Tuberculosis 9) Malaria 10) Road traffic accidents One child is killed in road accidents every 3 minutes worldwide. World spend Billions andRead MoreResearch Paper on Health5553 Words   |  23 Pagescommunities to give their daughters the additional time they need to grow and develop from girlhood into womanhood before becoming wives and mothers. * HIV Young people’s risk of HIV infection is closely correlated with age of sexual debut. Abstinence from sexual intercourse and delayed initiation of sexual behaviour are among the central aims of HIV prevention efforts for young people. Decreasing the number of sexual partners and increasing access to, and utilization of comprehensive prevention servicesRead MoreSubstance Abuse15082 Words   |  61 Pagesfractures and poisoning. 2. Sexual - unwanted pregnancy, sexual transmitted infections, HIV Aids. 3. Emotional - Poor self-esteem, self-inflicted injury, eating disorders, sleeping disorders, depression and anxiety, feelings and shame and guilt. 4. Long term - Development effects, disability, alcohol/drug abuse. They are at the risk of being abusive and violent behaviour. 5. Fatal - Homicide, suicide, infanticide and HIV/AIDS. RISK FACTORS FOR ABUSE a. History of child abuse b. Substance abuse c.

Nike An Innovative Company Essay - 1092 Words

1. Introduction NIKE, Inc. is one of the world largest designer and distributor of athletic apparel, footwear, equipment, and sport accessories for various types of fitness and sports activities. With total revenue hit $30 billion USD in 2015 (Statista, 2016), NIKE has developed four big brands, including: NIKE, Jordan, Hurley, and Converse, which each provides a strong connection with different customers. NIKE is a transnational company with five global headquarters, in: Beaverton, Oregon; Hilversum, Netherlands; Shanghai, China; Boston, Massachusetts; and Costa Mesa, California; with total of 62.600 employees worldwide (NIKE, 2015). NIKE, Inc. is an innovative company, with new designs that adapted with the demand from customers. According to NIKE (2016), sustainability has changed the ambitions of the company to create more innovations with less impact on environment. They called this as â€Å"sustainable innovation†. With this ambition, NIKE intended to create a sustainable business that goes hand in hand with environment and society. Through this sustainability based concept business, Nike is implementing a goal in minimizing environmental footprint of the company (NIKE, 2016). Moreover, Nike is known as one of the top climate friendly companies because of its huge initiative for countering the effect of climate change (Wang, 2012). This report will describe the environmental performance of NIKE and the strategies that they used to improve the sustainability, specificallyShow MoreRelatedEnvironmental Scan Paper1535 Words   |  7 Pagesenvironmental scanning is important because of the short term and long term success of a company. This tool helps companies scan, monitor, evaluate, and forecast the internal and external parts of the company. In order to obtain an accurate assessment of the internal and external variables of a company, the business managers would have to use a SWOT analysis to develop awareness to different of the company. For example, the company could want to measure consumer behavorior, competitor behavior, and current trendsRead MoreNikes Core Competencies Exist In Their1511 Words   |  7 Pageseffective marketing strategies and their innovative product design. These two elements provide much value and benefits to Nike’s consumers, are not easy for competitions to imitate, and can be leveraged widely to most of their products and markets. Although Nike does not manufacture any of its own shoes, the company is still today’s leader in selling athletic shoes and apparel. Nikes marketing strategy is an important component of the companys success. Nike is located as a premium-brand, sellingRead MoreNike Marketing Strategy Review1044 Words   |  5 PagesMurad Tahirov Marketing Spotlight-Nike The Nike story begins with its founder, running enthusiast Phil Knight. In 1962, Knight started Blue Ribbon Sports, the precursor to Nike. At the time, the athletic shoe industry was dominated by two German companies, Adidas and Puma. Knight recognized a neglected segment of serious athletes whose specialized needs were not being addressed. The concept was simple: Provide high-quality running shoes designed especially for athletes by athletes. KnightRead MoreNike s Business Growth Strategy934 Words   |  4 PagesNike has three main areas that they highlight in their strategic plan: innovation, sustainability, and market leader of athletic brands. These are three areas that are very hard to accomplish, and I hope Nike has not bit off more than they can chew. According to Nikebiz.com,† innovation is at the heart of NIKE, Inc. s business growth strategy. Our relentless focus to be better helps us create the world s most innovative products for consumers across the globe†. Innovation, especially in the clothingRead MoreNike vs Adidas1039 Words   |  5 PagesNike, Inc. (IPA: / naÉ ªki/) (NYSE: NKE) is a major publicly traded sportswear and equipment supplier based in the United States. The company is headquartered in Beaverton, near the Portland metropolitan area of Oregon. It is the world s leading supplier of athletic shoes and apparel and a major manufactur er of sports equipment with revenue in excess of $18.6 billion USD in its fiscal year 2008 (ending May 31, 2008). As of 2008, it employed more than 30,000 people worldwide. Nike and Precision CastpartsRead MoreCore Competencies And Sustainable Competitive Advantage1296 Words   |  6 PagesCore Competencies and Sustainable Competitive Advantage In terms of core competency, Nike 1) provides high quality durable items to its customers. As a leader in fitness clothing and accessories, Nike strives to be on the edge of the market by providing innovative ideas that improve customer satisfaction. Recognizing the importance of eco-friendly business 3) Nike promotes recycling to its customers and utilize recycling in its own manufacture of products. Lastly, this organization 4) completesRead MoreNike s Aggressive Marketing And Pricing Approach1154 Words   |  5 Pagesimpact on product sales every quarter. These investments have resulted in stronger brand loyalty through active customer-relationship building and continuous improvements in their products. With over 500,000 different products being produced each year, Nike has secured a position with each demographic across the globe. In addition, their abundance of suppliers has allowed them to achieve grand economies of scale over their competitors. This is further maximized thro ugh the high investments in informationRead MoreThe Tows Matrix : Swot Analysis942 Words   |  4 PagesThe tows matrix explains what the SWOT of Nike today. In this graph of SWOT matrix, we would like to explore what is possible for us to do in dealing with those elements in the business, externally and internally. Simply said, external comes from opportunities and threats, while internal comes from strengths and weaknesses of Nike. Corporate and Business Strategies Corporate strategy is the overall scope and direction of an organization. It indicates how managers are adding value to the businessRead MoreCompany Overview: Nike, INC1106 Words   |  4 PagesNike, Inc. is the world’s leading designer, marketer and distributor of athletic footwear, apparel, equipment and accessories for a wide variety of sports and fitness activities. NIKE, Inc. sells, distributes and licenses its products in approximately 200 countries around the world. NIKE focuses its products in seven key categories: Running, Basketball, Soccer, Men’s Training, Women’s Training, NIKE Sportswear and Action sports. NIKE sells products through its NIKE Brand and Affiliate Brands (ConverseRead More Nike- Huma Resources Essay1220 Words   |  5 Pages It all started with a simple handshake between two running geeks in Eugene, Oregon and now they own the worlds most competitive sports and fitness company. The Pacific Northwest is Nikes hometown but like so many ambitious souls, they have expanded their horizons to every part of the world. Nike has two headquarters; it’s World Headquarters in Oregon and its European Headquarters in The Netherlands. Those two running geeks are Bill Bowerman and Phil Knight. The long lived business partnership

Symbolism in a Worn Path - 1560 Words

Symbolism In Life and Death Jennifer Candis ENG 125 Ms. AltfeldFisher June 13, 2011 The short stories A Worn Path by Eudora Welty and Used To Live Here Once by Jean Rhys both carry the theme, symbolism of a journey. In both writings the authors used people, places and things to symbolize something extra, expanding the stories into more than just what is read. I chose these stories because they both consist of strong symbolic references to life. Each story was written in a third-person point of view and consisted of a journey made by the main characters, which in both cases happened to be a black woman. Although in one story the character was already dead and in the other, fighting death, there are many similarities between the†¦show more content†¦The giving of a gift that was used to purchase another is a generous symbol of what Christmas represents and was strongly displayed here. In Used To Live Here Once, the main character that is unnamed travels a journey similar to that of Phoenix Jackson. This woman too is African American and seems to be elderly based upon the way she reflects on her surroundings and also how she views children. The events that occur in this story seem to symbolize one’s life path and the decisions that may have been made throughout the course. The first obstacle that the woman faces is using stones to cross a river. She recalls the stepping-stones fondly and this is the first time you sense that she, like Phoenix, is familiar with the path that she has chosen. â€Å"She was standing by the river looking at the stepping stones and remembering each one.† As she remembers the stones, it seems that each one may have represented a point in her lifetime. For example, I feel that the â€Å"†¦safe stone where you could stand and look around,† may have represented childhood (R.W. Clugston, 2010). A safe place where you have not much responsibility and can take be a bystander until, you eventually grown up and have to make decisions for yourself. The author describes the day as, â€Å"a fine day, a blue day,† and the sky as having a, â€Å"glassy look that sheShow MoreRelatedSymbolism within in A Worn Path861 Words   |  3 PagesSymbolism is a literary device that uses objects or events that hides the even greater idea beyond what the text it gives you. For example, the bald eagle may seem like a fascinating bird, but to the eyes of an American the bald eagle represents freedom. Symbolism can be found throughout our everyday lives. Shoes have logos that are used to show what brand of shoes ones self is wearing, also money may seem like just paper, but it can also represent power. In the short story, A Worn Path, the mainRead MoreSymbolism of the Title a Worn Path891 Words   |  4 PagesSymbolism of the Title â€Å"A Worn Path† The short story, â€Å"A Worn Path† by Eudora Welty describes a very interesting character whose name is Phoenix Jackson. She isn’t your average person. Phoenix is a very old and boring women but the story is still interesting. The title is very symbolic of the story and has a very good meaning. Throughout the story you begin to learn more and more about Phoenix and you also discover some important things. Phoenix Jackson is a very old and small woman. She woreRead MoreSymbolism in A Worn Path by Eudora Welty1106 Words   |  5 PagesIn the story â€Å"A Worn Path† uses a continuous number of literary techniques and there is an overflow of symbolism. In the story everything symbolizes an object symbolism is when an object in the story can relate to something. Symbolism is a literary technique that adds meaning to a story by using an event or object as a symbol to represent something else. Phoenix Jackson represents the most important thing in the story the ancient Egyptian bird the Phoenix. The story â€Å"A Worn Path† takes place in DecemberRead MoreSymbolism in A Worn Path By Eudora Welty1096 Words   |  5 PagesSymbolism is the use of symbols to represent ideas or qualities. In a soccer team named Cruz Azul there is a person who symbolized hope for the team. His name is Christian Gimenez. Because he was injured he now comes in as a substitute. As soon as people see him getting warmed up they start screaming his name. In soccer when you are called up for the national squad most of the players have a sense of feeling proud for themselves because they get to represent a whole country. Also, in boxing whenRead MoreSymbolism in A Worn Path by Eudora Welty1818 Words   |  8 PagesUsing symbolism can take your story to a whole new level by showing us how each character feels in additional it can make a person or even an objects stand out a whole lot more. In Eudora Welty they used symbolism in many different ways that you can even notice them right away. In Eudora Welty ‘A Worn Path’ is a short story where symbols are found everywhere throughout many places where you read. This short story is about an old woman named Phoenix Jackson whom was a black African American thatRead MoreDecoding The Symbolism Used in A Worn Path by Eudora Welty1276 Words   |  6 PagesToday we will be talking about the different literary references used throughout Eudora Welty’s â€Å"A Worn Path†. I will explain and decode different techniques used by the author throughout her story. The story is of an old southern African American woman, named Phoenix Jackson, making her way into to town to pick up her grandsons medication from the doctor’s office. But this is no normal old woman. She cannot see and is picking her way with a cane to make her way across a barrage of obstaclesRead MoreSymbolic Source In A Worn Path by Eudora Welty1287 Words   |  6 PagesSymbolism is a characteristic that stands out in a person or t hing. People usually use symbolism for something that means to them or represents to them. The symbols are used for many things, for example the apple on the iphone, laptop or iPod symbolizes the brand. Symbols are also used in churches, for example the cross symbolizes Jesus Christ. It symbolizes how he was crucified, put to death on a cross. The colors symbolize something’s to for example the colors white, red and blue symbolize freedomRead MoreEudora Welty s A Worn Path854 Words   |  4 Pages Eudora Welty’s A Worn Path portrays an elderly woman, Phoenix, who endures a regular, strenuous journey into town to receive medicine for her grandson from a charitable pharmacy. She encounters difficulty aroused by nature and disapproving townspeople but triumphs and succeeds her goal. The use of characterization and symbolism creates A Worn Path by representing a strong and significant protagonist, as well as offering a symbolic meaning of life and courage when faced with love. The short storyRead MoreSymbolic References in Eudora Weltys A Worn Path1378 Words   |  6 Pages Symbolism is used in many ways and writers use symbolism to â€Å"enhance their writing.† It can give their work â€Å"more richness and color and can make the meaning of the work deeper.† In literary work the actions of the characters, words, action, place, or event has a deeper meaning in the context of the whole story. The reader needs to look see the little things like a dove symbolizes peace, or like the red rose stands for romance. Mostly everything can have a symbolism meaning to it. For instance theRead MoreLiterary Analysis Of A Worn Path1221 Words   |  5 PagesOvercoming Obstacles: A Literary Analysis of â€Å"A Worn Path† Thesis: â€Å"A Worn Path† by Eudora Welty is one of the best short stories to incorporate different symbolic representations of determination and the will to live. I. Introduction II. Phoenix A. Definition B. Characteristics III. Natural symbolism A. Steep hill B. Thorns of bush IV. Perceived Racism A. Imagined cake B. White hunter V. Arrival in Natchez A. Nurses’ comments B

Identify and Respond to Children and Young People at Risk

Question: Discuss or Identify and Respond to Children and Young People at Risk. Answer: Part 1: Child Abuse Indicator Two long-term effects on children or young people who have been abused include developmental effects and psychological effects (Arbour, 2008). This is because brain develops in reaction to the community, caregivers, and family. Further, there is a direct link between quantity and the quality of such experiences with the development of brain. As such, children or young people who have been abused will be psychologically affected and the development of their brains will be affected in the long term. Child Abuse Indicator Template Type of Abuse Indicator 1 Indicator 2 Indicator 3 Physical abuse Burns Bruises Fractures Sexual abuse Pain on urination Pregnancy Vaginal or penile discharge Neglect Social problems Problems at school Eating disorders Emotional Abuse Depression Sleep disturbances Poor self-esteem Part 2: Protecting Childrens Rights A duty of care connotes a legal obligation that is imposed on people needing them to adhere to the standard of reasonable care when they are undertaking any acts, which could foreseeably harm other people. It is generally the first element that has to be established before proceeding with any action in negligence (Broadhurst, Hall, Wastell, White, Pithouse, 2010). One can ensure the safety of children in his or her service and safeguard their rights by reporting all the disclosure or allegations of neglect, sexual abuse, and physical abuse to the Child Protection agency (Sawyer, Arney, Baghurst, Clark, Graetz, Kosky, Rey, 2001). Another way is by sharing resources, expertise, and information with the other service providers that support the child. It is important to maintain confidentiality when dealing with possible child abuse in order to prevent the disclosure of the name or any information, which is likely to lead to the identification of a person who has made a report (Bryant Baldwin, 2010). This will encourage many people to report cases of child abuse without any fear or contradiction. It is it important that professionals in Childrens Services share their concerns regarding significant risk of harm with someone in the service (for instance, notifying their supervisor), rather than dealing with the situation on their own in order to help in gathering information and reaching amicable course of action. Safeguarding, in regards to identifying and responding to children and young people at risk, connotes protection of children form maltreatment, prevention of childrens development and health, ensuring that the growth of children is in circumstances that are consistent with the provision of effective and safe care, and taking action for enabling all the children to have the best outcomes (Alderson Morrow, 2011).). I will help a new staff member incorporate the practice of safeguarding children into my centre by giving him tips on how to do this based on the evidence. I will also explain to him the policies we have been using as well as strategies put in place to be implemented. I would use sensitivity and awareness to inform children of their right to be safe and involve them in decision making by helping them identify when they are not safe and suggest strategies they can use to stay safe. Children can become cognizant of the factors that are likely to violate their rights and thereby leading to their abuse. Accordingly, children will easily find ways of avoiding the factors that are likely to violate their rights. Part 3: Recording and Reporting Reporting: The term Mandatory reporter connotes a term, which is used in describing the legislative obligations, which are imposed on selected classes of individuals to report the child neglect and abuse, that are suspected, to the government authorities (Broadhurst, Hall, Wastell, White, Pithouse, 2010). All the Australian states parliaments have enacted laws, which are mandatory on the same description. Non leading questions are type of questions, which do not make an assumption of what might have befallen a child (what might have happened to a child). In other words, they are questions that do not pre-empt for the child what he or she is supposed to say, but they rather give a description of the childs condition or behaviour in a factual way. Two examples of non-leading questions, which I could ask a child who I believe is at risk of harm are: (1) what happened to you? (2) Do you want to tell how the situation took place? Those who can be a mandatory reporter in my state or territory include teachers, principals, doctors, nurses including midwives, and police. All the types of abuse are reportable in NSW include indecent assault, sexual assault, aggravated sexual assault, sexual intercourse and attempted sexual intercourse, possession/ dissemination/ production of child, pornography or child abuse material, using children to produce pornography, grooming or procuring children under the age of 16 years for unlawful sexual activity, and deemed non-consensual sexual activity on the basis of special care relationships. Recording: Accurate recording the circumstances surrounding a possible risk of harm incident (in accordance with relevant legislation, service policies and ethics) is very necessary because it has influence on the future of the child (Erooga Masson, 2006). Further, it is in order to accurately record such circumstances because it is very possible that I will have children in the future who could be at risk of being abused, and I would as well want accurate recording for such circumstances. Statement Is this statement objective or subjective? Write you answer in the box below. Give a reason for your answer. Madeline, aged 4, looked depressed whilst playing in home corner. This is a subjective statement This is because it is someones opinion that Madeline, aged 4, looked depressed whilst playing in home corner. It is an opinion that Madeline looked depressed yet she may not be depressed as a matter of fact. Tom, aged 5, held his arm saying It hurts. This is an objective statement This is because by Tom himself saying that it hurts when he held his arms, it is a fact that it hurts and not an opinion. Ally, aged 9, wore long sleeves again today. She might be hiding bruises on her arms. This is a subjective statement This is because the mere fact that Ally wore long sleeves again today does not make it a reality that she is hiding bruises on her arms. She might have worn the long sleeves because it was cold. Given below it the hypothetical, anecdotal record about an incident that may have occurred in regards to a child or young person at significant risk of harm is as below. Peter aged 23 years intentionally slapped a tent year old boy called Victor thereby causing bodily harm to the former in terms of bruises and swelling wounds. The incidence took place on 23rd March 2016 at Port Victoria near Koriakor. The incidence was observed by George who is a police officer stationed at Victoria Police Station. Part 4: Exchanging Information and Collaborating with Services (i) The first example of a person that I would exchange information with about a child or young person at significant risk of harm, in addition to my director / Supervisor is a teacher. This is because teachers are generally trained to deal with children and can easily play with their psychology to extract information from them (children). As such, by exchanging information with a teacher about a child or young person at significant risk of harm, there is high likelihood that the teacher would be able to extract information from child in order to establish how the incidence happened. Another example of a person that I would exchange information with about a child or young person at significant risk of harm, in addition to my director / Supervisor is a doctor. This is because a doctor is in a position to do examination on the child to establish the magnitude of the harm caused by the abuse. (ii) The first example of a person that I would not exchange information with about a child or young person at significant risk of harm is a drunkard. This is because they are generally not in their sober senses and may just utter insults or increase the harm to the child. Another example is anybody who has ever been charged with any child abuse offense. The name of the organisation I would call if I suspected child abuse in my state or territory (Victoria State) is Victoria Police whose phone number is 000. If this contact is not available, I would call After Hours Child Protection Emergency Service if I suspected child abuse in my state or territory. The Phone number of the After Hours Child Protection Emergency Service is 131 278. However, they are only available between 5.00 pm to 9.00 am on Mondays to Fridays, but available 24 hours during the weekends and public holidays. One of the relevant agency that I could exchange information with to ensure maximum effectiveness of the report After Hours Child Protection Emergency Service, as they can quickly respond to any emerging issue concerning the child abuse to ensure that the situation is dealt with amicably. Another relevant agency that I could exchange information with to ensure maximum effectiveness of the report is the Department for Child Protection, which ensures that a child is protected from any harm or abuse. Part 5: Ethical Dilemmas When during orientation, Ali and Hans father, Raj, reports that I may hit Ali if she does not do the right thing, but I am not to touch his son Han, because he is the male and should be honoured, the ethical dilemma is about hitting the child. As a professional, am not ethically allowed to hit a child as a form of punishment, as physical punishment is against the law. Based on the ethical dilemma presented above, I would inform Raj that it is unethical to hit a kid as a form of punishment. As such, in the vent I hit his daughter when she does a mistake I will be going against the ethical code of conduct required of me by the child protection policy. In regards to the ethical concerns above, I would seek for support in my centre from two different people. These are the principal and the teacher in charge of guidance and counselling. The reason why I would do this is for them to assist in coming up with the best way in which Raj can be made aware that his assertion the daughter should be hit when she does wrong thing and the son should not be hit, but should be honoured, is unethical and discriminatory. Three possible ethical concerns when working with children and young people and their families include the relationship between adult and a child, as some of the cultures not allow adults to talk directly to children without going through their parents; mode of greeting, as some cultures do not allow adults to shake childrens hands; and mode of punishment, as some cultures do not allow hitting of male gender. I would you respond to unethical behaviour of others in my service by strictly following the ethical code of conduct that my type of service requires me to follow. Part 6: Disclosures What I would say immediately in response to Ashlees comments is that I will not tell mummy in order not to make her have stress, which may results into an emotional child abuse. My legal obligation is to report this concern since it is about the safety, welfare or wellbeing of a child or young person. I would report this matter to The Executive Principal via the Head of School. What I would say immediately in response to Erics comments is that I will not tell Mercy that you told me what happened. The reassurance that I will give him is that the matter will be solved amicably and Mercy will never do such a thing to him again. My legal obligation is to deal with this matter confidentially and only disclose it to the relevant authority or as required to comply with your mandatory reporting obligations The ethical dilemma here is the relationship between the staff members. It is expected that staff members should have a cordial relationship. However, by reporting this matter, it may be hard for me and Mercy to have a cordial relationship in case Mercy get to hear that I am the one who reported the case. References Arbour, L. (2008). The responsibility to protect as a duty of care in international law and practice. Review of International Studies, 34(03), 445-458. Alderson, P., Morrow, V. (2011). The ethics of research with children and young people: A practical handbook. Sage Publications Ltd. Broadhurst, K., Hall, C., Wastell, D., White, S., Pithouse, A. (2010). Risk, instrumentalism and the humane project in social work: Identifying the informal logics of risk management in children's statutory services. British Journal of Social Work, 40(4), 1046-1064. Bryant, J. K., Baldwin, P. A. (2010). School counsellors' perceptions of mandatory reporter training and mandatory reporting experiences. Child Abuse Review, 19(3), 172-186. Erooga, M., Masson, H. (Eds.). (2006). Children and young people who sexually abuse others: Current developments and practice responses. Routledge. Holt, S., Buckley, H., Whelan, S. (2008). The impact of exposure to domestic violence on children and young people: A review of the literature. Child abuse neglect, 32(8), 797-810. Parton, N. (2011). Child protection and safeguarding in England: Changing and competing conceptions of risk and their implications for social work. British Journal of Social Work, 41(5), 854-875. Sawyer, M. G., Arney, F. M., Baghurst, P. A., Clark, J. J., Graetz, B. W., Kosky, R. J., ... Rey, J. M. (2001). The mental health of young people in Australia: key findings from the child and adolescent component of the national survey of mental health and well-being. Australian and New Zealand Journal of Psychiatry, 35(6), 806-814.

White Collar Crime an Example by

White Collar Crime Whenever we hear the phrase white collar, the first thing that comes to mind is working in an office environment. However, as we shall see later in this discussion, there is more than one meaning to this phrase White collar crime refers to an act or omission which contravenes or goes against certain stipulated laws which is committed by people who hold high position or big offices. Edwin Sutherland, a professor of criminology was the first person to come up with this term and argued that white collar crime has a direct link with cooperate crime as the former involves fraud, embezzlement and computer related crimes which white collar employees are more exposed to. This discussion takes a look at this kind of crime and the various impacts that it has on the society (Edwin. 1983). Need essay sample on "White Collar Crime" topic? We will write a custom essay sample specifically for you Proceed Reports released by the Federal Bureau of Investigation (FBI) indicate that on average, the United States of America spends slightly above 300 billion every year in fighting white collar crimes. This goes to show how rampant this type of crime has become especially with the advancement of technology in todays society. Some of the crimes that have been classified as white collar crimes include embezzlement of funds while in office, fraud, using computers to commit crimes, theft of identity, corruption, forgery and all other forms of fraud (David, 1994). According to the FBI it has proven difficult over the years to prosecute persons found guilty of white collar crimes. This is because the means and methods used to commit these crimes are always sophisticated, and in most cases evidence of commission of such crimes is normally concealed and unearthing such evidence requires experts. Currently the laws that govern this type of crime are the Commerce Clause and the constitution of the United States of America. Although white collar crimes are non-violent in nature the kind of harm they cause could be immense (Edwin. 1983). Due to the non-violent nature of white collar crimes, the punishment meted on offenders of such crimes is normally lighter in comparison to violent offender. In addition, statistics indicate that there is a less likelihood for a white collar criminal to re-offend one punished. This stand has been heavily contested with some people arguing that persons found guilty of white-collar crimes should be punished heavily as their actions could cause great harm than imagined. For example, a person who embezzles peoples savings in a bank could be more dangerous than a person who mugged a passerby on the road (Jerod. 2009). Law enforcers have admitted that the nature of this type of crime poses quite a challenge in curbing the crime. The first challenge is that the manner in which this crime is omitted is quite technical and presentation of evidence to prove commission of crime can be difficult. Secondly since this type of crime is done by high profile people, who are bale to hire good lawyers, proper prosecution of such person has not been quite realized. If found guilty offenders of white collar crimes are not incarcerated in the same jails as the rest of the criminals. Instead they are put in minimum security prisons where the freedom is greater (Jerod. 2009). It is rather obvious that curbing this form of crime has been a challenge for many law enforcers in the world. It may require the government to train the law enforcers in technical matters to make prosecutions easier. It is only by so doing that white-collar crimes will be put at bay. References Edwin. H. Sutherland. (1983). White-Collar Crime: The Uncut Version, New York: Yale University Press. David. N. (1994). White Collar Crimes. New York: Dartmouth Publishing Company. Jerod. H. Israel et al. (2009). White Collar Crime, New York: United States of America.