‘Current price range best opportunity for stock investment’

Sumit Podder on Tuesday joined Bangladesh Finance Capital, a subsidiary of Bangladesh Finance. In his long 13 years glorious career he led the structured finance department at Bangladesh Finance before joining Bangladesh Finance Capital; before that, he was also the head of the corporate advisory of City Bank Capital Limited. Moreover, he worked with River Stone Capital, Alliance Financial Services, and Alliance Securities and Management Limited. He was talking with The Business Post’s Talukder Farhad in several issues including capital market.

Tell about Bangladesh Finance Capital?

Sumit: Bangladesh Finance Capital Ltd. is a subsidiary company of reputed non-bank financial institution Bangladesh Finance, which is known as BD Finance. We provide services as a merchant bank. There are more than 55 merchant banks under Bangladesh Securities and Exchange Commission (BSEC), we are one of them.

Our plan is to provide 360 degree service from investment banking to portfolio management, as well as research. We also want to give way out to the clients, as they get funds and overall suggestions for business.

What kind of other plans do you want to go ahead with?

Sumit: We also want to do some work in corporate advisory. As you know, there have been some big mergers in Bangladesh. These include, Robi-Airtel, Unilever-GSK etc. We anticipate that there will be many such mergers in the future. We want to work on this potential side.

We generally deal with discretionary and non-discretionary portfolio management. Now we want to increase focus on discretionary portfolios, so that we can play a role in market development. Apart from this we have launched some products for retail clients. Also we are working for midrange investors on the nondiscretionary side.

We want to do a lot of research. It will help with market development as well as back line to our customers. We plan to release monthly, quarterly and yearly research papers about the market and overall economy.

How do you see the capital market floor price?

Sumit: Overall economic conditions have changed globally after covid-19 pandemic. It has also affected Bangladesh. As the regulatory body feels that giving a floor price can protect the market from a down trend. From that point the regulator gave it because of safety.

So this floor prize is given to protect the big interest. And that is to protect the interests of small investors. But I agree with you that the floor price is not beneficial for the long term from the overall side. It does not sustain for long term.

Under the current volatility of the economy, should we invest in the capital market or withdraw the investment?

Sumit: Withdrawn the investment where do you go? Where are the alternative investment scopes, either financial market or capital markets? Now that the floor price has been given in the market, it will not be possible to exit by selling, and even if you do that, it will not be a permanent exit. Where does the ideal money go?

The question should be, whether the current time is the ideal time for investment? In answer to this, I will say, the current price range is the best opportunity to invest. However, it is difficult to say how long the opportunity is for.

In this context, we do not know when the global and country’s economic situation will be normal. But it takes some time to go from down stages to a peak. Investors should wait till that time, to get better returns.

What would be your advice for capital market investors in such a reality?

Sumit: When we make an investment, we do our due diligence. For example, in doing fixed deposits, we do a thorough analysis of which bank is good, how is the health of its financiers, how it gives returns, etc. This analysis needs to be done for the capital market as well.

So that we understand the shares of which company we are buying. How was the company’s EPS trend? Why is EPS increasing? These require a little analysis. Many times it is not done due to lack of time of the investors. We are an intermediary to help investors in this side.

My advice would be to invest in the capital market with a long term planning and definitely the returns will be very high. Companies of “A” category pay good dividends. If we can capture that growth and the penetration of market demand and supply at the same time, then we can benefit in the long run.

Where do you want to take BD Finance Capital as the new managing director?

Sumit: Back side of our organization is Bangladesh Finance, which has a reputation of 22 years. Bangladesh Finance Capital came into operation in 2012. Here too there is a journey of almost 10/11 years.

The financial stability that we have, the trend that we have, the good will that sponsors have, as a market competitor, if we think of other competitors, we are not behind at all. We are definitely one step ahead.

First of all we will proceed with proper planning. A strong team will be put in place, with which we will move forward in alignment. If the team wins, we will win. So our first priority will be team dedication.

The second priority is to ensure full service to the customer, be it investment banking, portfolio management or research base. I hope we will be a top merchant bank in the next 5 years.

Is there any special plan outside of this?

Sumit: We have another plan, that is not only we will work on the capital market’s development but also will work on building global reputation. There is another plane as well. As you may know, the government is implementing many projects with a 5/10 year plan. We have a plan to work jointly with the government to implement these infrastructures.

We know that the funding sources of government projects are from their own fund, banks and NBFIs or some foreign sources. If this funding can go to a collaboration model then more project funding is more beneficial.

For example, we made a funding plan for the government. By doing this we will become a locally reputed company. At the same time we will also create a footprint. The government will also benefit from this place.