To protect small investors’ interests, the Bangladesh Securities and Exchange Commission (BSEC) had no alternative but to introduce the floor price, said the regulator’s Chairman Professor Shibli Rubaiyat-ul-Islam.
“We had been forced to launch the floor price policy to save the small investors’ following the economic shocks in global as well as domestic fronts created by the coronavirus pandemic and the Russia-Ukraine war,” he added.
The stock regulator chairman came up with these remarks while addressing a seminar titled “The problems and potentials of capital market in Bangladesh” as the chief guest held in the capital Monday.
Dhaka Stock Exchange (DSE) Chairman Md Eunusur Rahman, Chittagong Stock Exchange (CSE) Chairman Asif Ibrahim, Bangladesh Association of Publicly Listed Companies (BAPLC) former President Azam J Chowdhury and Bangladesh Merchant Bankers Association (BMBA) vice president Md Moniruzzaman were present at the event organised by the Economic Reporters Forum (ERF).
In terms of the capital market situation, Shibli Rubaiyat-ul-Islam said Bangladesh did not face massive shock that it was supposed to embrace for in time of the ongoing global economic turmoil.
The institutional investors represent as much as 80 to 90 per cent of investments in capital markets across the globe, but the situation is different in Bangladesh with around 80 per cent of the investors being small here, the BSEC chairman continued.
Commenting on the upcoming launch of the commodity exchange in Bangladesh, Professor Shibli said once it takes the shape, the scope for under-invoicing and over-invoicing would be stamped out.
“Necessary work is undergoing to form a commodity exchange in the country. Once becomes operational, it would enable consumers to see the market scenarios of both the global market as well as the local market,” he said.
“The Russia-Ukraine war put a very ominous impact on the supply as well as the prices of the fuel energy and petroleum in the global market, hitting hard the Bangladeshi consumers as well.”
Due to the shock created by the war, Bangladesh had to suffer from load shedding although the country did not have electricity shortages, the BSEC chairman stated mentioning that despite being a self-reliant nation on food, the government was advising the countrymen to remain cautious to face any further unwanted situation.
“The ongoing global economic strains caused many big incidents across the globe with the UK changing its prime minister thrice, while many other nations witnessed leadership changes. But we were yet to experience such any turmoil,” the BSEC boss said.
Highlighting various challenges in the country’s capital market, DSE Chairman Eunusur Rahman said the number of learned investors in the country remained very low.
“Investors often make investment decisions being advised by others which is a big challenge to book profits from stock investments. Besides, the number of institutional investors and skilled workforce also remain low Bangladesh than those of many other countries,” he added.
Referring to that the policy support in the country is still inadequate, Eunusur Rahman stated that there were still caps on the bank interest rates, hampering the progress of the capital market.
“Anyone can take a loan from banks at 9 per cent interest rate. But large companies can avail of loans from lenders at an interest rate of 8 per cent, the DSE chairman said adding that due to this extra benefit many conglomerates were opting not to go public.
CSE Chairman Asif Ibrahim said they would ink an agreement soon with the Indian multi-commodity exchange to introduce a commodity market in Bangladesh.
“We have already sent the draft rules to BSEC with this regard. Once we get the approval, we would hopefully be able to launch here the commodity exchange,” he continued.