Invest more in capital market: BSEC to insurers

Bangladesh Securities and Exchange Commission (BSEC) has urged the country’s 26 insurance companies to increase investment in the capital market.

At a time when the country’s capital markets are suffering from a liquidity crisis, the BSEC urged the insurers for increased stock market investments at a meeting with top officials of different insurance companies held at the commission building at Agargaon in the capital on Wednesday afternoon.

BSEC Commissioner Shaikh Shamsuddin Ahmed presided over the meeting attended by managing directors, CEOs, CFOs, and other top officials of 26 insurance companies.

Insurance Development and Regulatory Authority of Bangladesh (IDRA) Executive Director Harunur Rashid also attended the meeting.

The meeting was organised at a time when Dhaka Stock Exchange (DSE), the country’s premier bourse, is facing a dire liquidity crunch as the participation of active investors dropped drastically amidst the country’s macroeconomic hardships. The DSE turnover Tuesday stood at Tk 272 crore, the lowest since July 16, 2020.

The amount of investment of those insurance companies in the capital market was discussed in the meeting. The meeting also discussed how the insurance companies’ investments in the stock market can be increased, BSEC Executive Director Rezaul Karim told the reporters after the meeting.

“Besides, the insurance companies which have applied for IPO were asked if they are facing any kind of problem. The commission and IDRA executive director have assured them to solve the problem if there is any,” he added.

At the meeting, BSEC Commissioner Shamsuddin Ahmed said the banks accept short-term deposits and provide long-term loans. But the insurance companies get long-term deposits; so if they invest in the capital market, they will get more returns.

IDRA Executive Director Harunur Rashid said insurance companies can invest 30 per cent in treasury bonds and 25 per cent in listed securities of the capital market. He assured the insurers that any kind of assistance will be provided in the case of investment.

In reply to a query, BSEC Spokesperson Rezaul Karim said that the overall liquidity crisis of the capital market was discussed in the meeting. “In this regard, how to increase the role of institutional investors has also been discussed. If their role increases, the turnover in the market will hopefully jump,” he said.

“At the meeting, some insurers talked about the floor price. But the commission said it is temporary. It will be lifted once the market shows an upward trend,” the BSEC official said.