The New Nation - Internet Edition

Business Reporter

Investors usually tend to take high risks while investing in share markets, particularly at a time when the market shows an upward trend, speakers at a seminar said yesterday terming it as a 'major weakness' on part of the investors.

They said investors are most often influenced by their profit, savings, age, investment horizon and gender in deciding how much to invest in the stock market.

Among them profitability has the highest positive effect and short-term investment horizon has the highest negative influence, showed a research.

Voice of Business, in cooperation with FinCap Analysts and Advisors organised the seminar, styled "Investing in the Stock Market: What Do We Want?" at the conference hall of Business Studies Faculty of Dhaka University on Saturday.

Suborno Barua, Assistant Director (Research), Institute of Microfinance (InM) presented a research paper on "General and Risk Characteristics, Investment Determinants and Confidence on Stock Market--An Assessment on the Individual Investor of Bangladesh" at the seminar.

Prof Abu Ahmed said the country's economy has to be attached with share market more aggressively to develop the economy adding that the country's economy was detached from the share markets in the past. He hoped that the next government would try to attach the economy with the share markets more intensively and vigorously with a view to strengthening the economy. Investment by small investors dominate some 80 per cent of the transactions at the country's share markets, he added.

The research revealed that individual investors are mostly micro, very small or small bracket with investment less than Tk 2.5 million by investment size where most are below the age of 40 and most with income level less than or equal to Tk 40,000 a month. Investors earned 56 per cent return on their investment in 2007 on an average and mostly they trade by themselves directly.

The research found that investors' confidence level on the brokerage house is at the moderate level (85 per cent), a substantial portion of investors decide regarding investment based on market information where around 70 per cent investors believe that there degree of rumour in the market is high.

The paper also said many researchers had concluded that in the highly inefficient market there are many investors who invest even without knowing how much risk they were bearing or going on to bear.