Bangladesh stock market boom fuels dire warnings

DHAKA, October 12, 2010 (AFP) – A flurry of cooling measures has failed to end a record-breaking bull run at Bangladesh’s main stock market, with regulators now warning of an imminent crash that could devastate the broader economy. The main Dhaka Stock Exchange (DSE) general index has hit new highs nearly every day for the last three weeks, closing at 7,480 last week to cap a 10-month bull run that has seen the index soar 65 percent.

As concerns deepened, DSE president Shakil Rizvi called an emergency press conference Saturday to appeal for calm.

“The market is dangerously overheated. We are begging investors: don’t buy overpriced stocks — you will lose your savings,” Rizvi said.

His warning triggered a sharp correction Sunday when the index plunged more than 2.5 percent — the second largest one-day fall in nearly a decade. But the bullish mood returned almost immediately with a 1.42 percent gain on Monday.

“The market is a time bomb,” Rizvi said, warning of another 1996-style crash — when wild speculation and lax regulation sent DSE stocks soaring to 3,600 before they collapsed to just 700 points.

The DSE’s daily turnover has doubled since the start of the year to a record 400 million dollars, with mark

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