Stakeholders for making capital market main source

As long as the banks have the liquidity to give out long-term loans, good companies will not be interested to enter the country’s capital market, say stakeholders.

They said the capital market should be the main source of long-term investments as banks are not always able to give long-term loans. They noted that the capital market can play a big role in long-term financing but it needs to improve more.

The stakeholders also suggested creating a listing of more multinational companies (MNCs) with stock exchanges to ensure long-term stability in the capital market.

Their views came at a roundtable, titled “Current Scenario and Outlook of the Capital Market of Bangladesh,” held at The Westin Dhaka on Saturday.

The Capital Market Journalists’ Forum (CMJF) and the Bangladesh Merchant Bankers’ Association (BMBA) jointly organized the event, where Bangladesh Securities and Exchange Commission (BSEC) Chairman Prof Shibli Rubayat-Ul-Islam was the chief guest.

The programme was presided over by BMBA President Md Sayadur Rahman. CMJF President Ziaur Rahman moderated the webinar discussion.

Addressing the event, former BSEC chairman Faruq Ahmad Siddiqi said, “Our capital market is not developing properly. Good companies are not coming while opportunities are not being created for new companies.

“When banks are ready to provide long-term financing, why would good companies come if there are no good opportunities in the capital market?”

Shortage of fundamental securities is the main challenge in the capital market, said IDLC Investments Limited Managing Director Md Moniruzzaman in his keynote presentation.

“As per the Bangladesh Bank’s [BB] circular, loan disbursement must be done based on audited accounts. If this happens, we will see the real financial health of those accounts,” he said.

Former BSEC chairman M Khairul Hossain said entrepreneurs now enjoy a low-interest rate while getting loans from banks, which is helping their businesses, but it’s not possible in the capital market.

Richard D’Rozario, president of the DSE Brokers Association of Bangladesh, said all types of people should invest in the capital market. But those with no knowledge of the market should invest through institutional investors. New investors can also invest in mutual fund units.

He claimed that many listed companies’ profit is generally consumed by their subsidiaries.

Speaking at the event, capital market analyst and Dhaka University (DU) teacher Associate Professor Al Amin called for ensuring transparency in the financial statements of listed companies and good governance in the companies’ operations to protect the investors’ rights.

To restore confidence in the capital market, stock market regulators and institutional investors should be more serious in protecting the general investors, he said.

Hasan Imam, president of the Association of Asset Management Companies and Mutual Funds (AAMCMF), said they aim to increase the size of the mutual fund industry by at least 25 per cent within a year. “To that end, each asset manager will contribute separately.”

Stock market analyst Abu Ahmed said some MNCs are doing business in the country but they are not listed with the two bourses. “However, they are publicly listed in the neighbouring countries. They should be offered tax waiver facilities in the interest of our capital market.”

“There are also a large number of junk companies in our capital market,” claimed Abu, also an honorary professor at DU’s Economics Department.

Dhaka Stock Exchange Chairman Md Eunusur Rahman urged the government to increase the difference in corporate tax rates between listed and non-listed companies to 10 per cent.

BSEC Chairman Shibli said both Bangladeshi and foreign products will be traded in the commodity exchange which will be launched soon. “This will increase the capital market size by a lot.”

He also said the capital market will play a major role in increasing the country’s revenue with whatever support, especially tax-related ones, the government provide.

Shibli added, “The recent decisions of the mutual funds have also been good. They have started paying better dividends. If any are not doing that, we find the reason and bring that to their attention. We will also introduce a managers’ fee based on their performances.”

He said they also plan to start short selling in the capital market. “Actions will be taken against share market manipulators very quickly.”

Representatives of BB, the National Board of Revenue, and the Chittagong Stock Exchange were also present at the roundtable.