‘Learn and earn from capital market’

BASM DG Toufic Ahmad Choudhury shared his insight in an exclusive interview with The Business Post recently

If one wants to invest in the capital market, one needs to know the strategy to identify the risk and deal with it. In other words, one has to learn if one wants to earn. Bangladesh Academy for Securities Market (BASM) is working to this end to educate potential investors.

BASM Director General Toufic Ahmad Choudhury said this in an exclusive interview with The Business Post’s Talukder Farhad.

According to Toufic, if need be, new law should be formulated to bring long-term investment in the capital market that will help enhance the market size.

TBP: There is a department of Bangladesh Securities and Exchange Commission (BSEC) to provide financial literacy, and there is another independent institution -- Bangladesh Institute of Capital Market (BICM). Why is then BASM?

Towfic: The financial literacy programme began in 2016 as per the directive of Prime Minister Sheikh Hasina. Then a gazette was published from the BSEC. In the light of the gazette, BASM has been established that has launched financial literacy programme from May this year.

We have an academic council headed by a BSEC commissioner. That council sets the training curriculum. As a result, there is no overlapping in the teaching of BASM with the other two institutions. Our main responsibility is to spread financial literacy across the country.

TBP: How many potential investors have been trained since the beginning of the programme, and what is the number of women there?

Towfic: Around 500 potential investors and employees of government and non-government organisations have been trained, and there were 70-80 women participants. Recently, a separate training programme has been launched for women.

The number of women investors in the capital market is very low. Although there are about one lakh women investors with BO accounts, most of them are inactive. However, in the context of our country, savings largely hinge on the efforts of women. We are training them to invest their savings in the capital market.

TBP: After the commencement of financial literacy programme, it was said that the programme will also be included in the text curriculum. Has BASM taken any initiative in this regard?

Towfic: Investment training should not just be limited to potential investors only; such financial literacy needs to be spread to different stages of education system. For this purpose, every country has a national strategy for financial education, but it is absent in our country.

The BASM chairman has sent a letter to the Ministry of Education for discuss how to include financial literacy in the text curriculum. We are yet to receive any response. I will contact the Ministry of Education in this regard.

TBP: After the financial literacy programme started, have you noticed any behavioural changes of the investors as of now?

Towfic: Some changes are noticed among the investors. As profit in the capital market is entirely yours, so is the loss as a whole, and if there is loss, it does not mean that the losers should take to the street, and go on the rampage. I think there has developed a change in attitude among the investors.

However, when it comes to training, we see that most investors tend to make short-term profit by trading stocks rather than long-term investment. It will take time to change this attitude.

TBP: What would be your advice for investors?

Towfic: The capital market is a knowledge-based market. If you want to play here, you need to have clear knowledge about the market and risk-taking mentality.

It is not a money market that you deposited money in the bank and after a few days, you started reaping profit. If you want to earn money from the capital market, you have to have proper knowledge. The market trend is higher return and higher risk, but we don’t want to understand that risk. That is why investors take to the streets when they fail.

TBP: What kind of steps should be taken to stop market manipulation?

Towfic: Market manipulation cannot be stopped through law-enforcement and regulation all the time. It requires automatic check and balance, and for that the market needs to be increased in size.

Markets in India, USA and Europe are also manipulated. But there is less impact of manipulation out there since their market is much wider.

As our market is small, any kind of manipulation leaves more impact. The capital market is expanding due to the recent initiatives taken by the incumbent commission.

TBP: What are your suggestions for capital market development?

Towfic: There should be well-coordination between money market, securities market, insurance market and other securities markets. Everyone has to do their job. But the opposite is happening in Bangladesh. As it turns out, most long-term investments come from banks. If the banks run into trouble, a bad scenario will be in the offing.

The government is giving more importance to the banks to finance its deficit budget which is not seen anywhere in the developed world. If the government wants, it can raise money from the capital market by issuing bonds under big projects. If the government does not develop the bond market, the corporate bond market will never develop.

TBP: Thank you so much for giving time to The Business Post.

Towfic: Thank you as well.