Dhaka, Bangladesh (BBN) – The country’s capital market witnessed a rather disappointing year in 2011.

After the Dhaka Stock Exchange General Index (DGEN) reached a record high of 8,919 points on December 5 last year, a situation which many analysts believe to have been overheated, it shed much of the gains of the latter half of 2010 losing around 37 percent year-on-year in 2011, according to the Citibank N.A annual market update report-2011.

The report said the average daily turnover decreased by around 62 percent in 2011 compared to the highly liquid market in the previous year.

The stock market overheating in the latter half of 2010 can be attributed to several factors including the high demand for shares amid a dearth of supply of quality stocks and the overexposure of the financial sector in the stock market, among others.

In order to boost the capital market, the regulators and the Government came up with various incentive packages including exemption of capital gains tax for stock market investors over the course of the past 12 months.

Besides, the state-run Investment Corporation of Bangladesh (ICB) and Bangladesh Association of Banks (BAB) came up with two rescue funds namely the Bangladesh Fund and Market Stabilization Fund worth BDT 50 billion each.

“The funds are yet to make any significant impact on the market owing mostly to the incapability of the Bangladesh Fund to mobilize the promised amount and the less-than-expected contribution by the banks in the Market Stabilization Fund,” it noted.

BBN/SSR/AD-30Dec11-10:42 pm (BST)