The capital market of Bangladesh experienced a vibrant week, fuelled by investor optimism following recent changes in government and a shift in the leadership of the Bangladesh Securities and Exchange Commission (BSEC).
Stock market analyst Professor Abu Ahmed emphasized the critical role of investor perception in driving market performance, noting that psychological factors have a significant impact on the market's movements.
The depression among investors before August 5 was largely due to the declining economic indicators, Professor Ahmed said. However, after August 5, when Professor Yunus, with his vast international connections, assumed leadership, it became clear that the previous system under the Awami League government would no longer continue, he added.
Professor Ahmed expressed optimism about the future, stating, "Bangladesh is now a free country, and we expect an influx of investment. The local business community will become more active, the decline in foreign exchange reserves will stabilize, and inflation will be curbed. Although GDP growth may not reach previous highs, it will recover from the depressed levels."
He also predicted an increase in the country's exports and anticipated positive changes across various economic sectors. "We are hopeful that the situation will improve significantly compared to the pre-August 5 era. The advisory council of the interim government is likely to fulfil its responsibilities effectively, as reflected in the renewed confidence in the stock market," he added.
Commenting on the role of the previous BSEC, Professor Ahmed criticized its management of the market, describing it as "gambler-based" rather than driven by genuine investors. He noted that no quality shares had been listed in recent years and identified several market loopholes that need to be addressed to make the market more vibrant.
He also highlighted the return of portfolio investors who had previously exited the market and criticized the floor price system implemented by the previous commission as a significant mistake. "We hope that all the dark chapters associated with the Awami League government will be erased from the share market," he said.
Professor Ahmed pointed to Grameenphone as an example of a company that faced discriminatory treatment from the government, suggesting that the recent positive changes in the market are a response to a more favourable environment.
Regarding the appointment of the new BSEC chairman, Professor Ahmed stressed that the primary tasks should include bringing transparency to the market, ensuring accurate corporate reporting, supervising dividend payouts, and restricting placement business. The stock market must be free from all kinds of mafia groups, and the new chairman should tackle these issues with an iron fist, he asserted.
He also blamed gamblers and margin loans for the deplorable state of the capital market, emphasising that these elements must be eliminated to restore the market's performance.
Another capital market analyst, Monzurul Alam, echoed this optimism, noting that the changing political situation has been boosting public confidence in the market. "People are returning to the stock market and injecting fresh capital. We expect the new government to implement pragmatic measures that will further restore confidence in the market," he said.
The Dhaka Stock Exchange's benchmark index, DSEX, reflected this renewed optimism, rising to 6,015.91 on Sunday from Thursday's 5,924.81. Throughout the week, the DSEX fluctuated, closing at 5,932.28, 5,867.96, 5,952.77, and 5,903.84 over the following four days.
