‘Majority of listed cos feeble’

As much as 56.3 per cent of respondents of a survey claimed that companies coming to the capital market through the initial public offerings (IPOs) do not have a sound fundamental base.

Besides, 50 per cent of them said the listed companies do not maintain proper standard in preparing and publishing their financial reports; rather they are in anomalies with regard to financial reporting.

Another challenge in Bangladesh’s capital market is the suspicious trading in the secondary market, as 50 per cent of the survey respondents said the secondary market trading lacks transparency.

The survey styled ‘Bangladesh Business Environment 2022: Findings from the Executive Opinion Survey’ conducted by the Center for Policy Dialogue (CPD), an independent think tank, came out of these grim scenarios regarding Bangladesh’s capital market.

CPD officials revealed the survey findings at a media briefing in the capital on Sunday. The organisation carried out the opinion survey from April to July 2022 in partnership with the World Economic Forum.

The survey encompassed 10 key pillars including infrastructure, financial system, trade, competition, governance, building human capital, working and employment, and risks managing economic recovery.

“Bangladesh’s business atmosphere did not show progress in the fiscal year 2021-22, either it was stagnated, or it was deteriorated compared to the previous year,” said Khondaker Golam Moazzem, research director of the CPD while presenting the survey findings.

The intervention of the Bangladesh Securities and Exchange Commission (BSEC), the securities regulator, according to the survey, on listed companies, still remained very low, another barrier to ensure a vibrant capital market in the country.

The principle role of the BSEC, as per the securities laws, is to supervise the listing procedures of companies on the stock exchanges.

Moreover, it is also the regulatory body to look into whether the listed companies are publishing their quarterly or annual financial reports timely and in a proper manner.

It also oversees the accuracy of audit measures to prepare companies’ financial reports and detect any possible anomalies or inconsistencies in any published financial reports.

In addition, the BSEC, as per the securities laws and guidelines, penalises individuals or companies if they get involved in any suspicious share transactions trying to manipulating the market sentiment.

Speaking at the event, Dr Golam Moazzem said materially the country’s capital market still remained inefficient, adding that the regulatory bodies still lagged behind to make the market sustainable and investor-friendly.

The survey also stated that there was a lack of transparency in opening beneficiary owners’ accounts and that still remained rampant due to the diligence of the bourses.

A total of 13 companies got listed in 2021. Of them, five companies had offered a premium to their par value and the remaining eight companies had offered only per value while starting their trading in the secondary market.

On the other hand, seven companies got listed in 2020 of which only one company offered premium to its par value, while the remaining six companies offered per value.

According to the CPD survey, 56.3 per cent of respondents said new companies coming to the capital market during that period through initial public offerings had been weak.

BO account or beneficiary owners account, a mandatory step for stock investors, get finalised through the Central Depository Bangladesh Limited (CDBL).

The think tank also surveyed institutional investors.

As much as 34.4 per cent of survey respondents said institutional investors were playing a ‘questionable role’ in the stock market.

Institutional Investors include asset management companies, mutual funds, pension funds, private limited companies, BSEC-registered eligible investors, banks, merchant banks, dealers in the DSE, and corporate investors.