New commission, proposed budget could barely boost bourses

Neither Bangladesh Securities and Exchange Commission (BSEC) new commission nor the proposed budget could restore the confidence of ordinary investors in the capital markets. As a result, the transaction has not increased yet rather the index and market capital have further declined. Ordinary investors and market analysts say there is no alternative to taking special initiatives to end the ongoing capital market crisis.

The capital market has been in turmoil since the economic downturn in 2010. Although a series of reforms, including the restructuring of the BSEC, was carried out to bring normalcy back to the bourses, nothing yielded. The outgoing commission, led by Khairul Hossain, failed to attract investors to the market. On the contrary, aggrieved investors vented anger on the authorities concerned at various times. The Khairul Commission has come under fire from investors and market experts for listing a number of low-quality companies in the capital market.

Meanwhile, BSEC has got three new commissioners, including Chairman Professor Shibli Rubaiyat-ul-Islam.

Investors feel new hope that once the new commission takes responsibility will do something for the share market. After 66 days of closure due to coronavirus, three weeks have passed since the resumption of trading in the market, the market has not gained momentum.

Meanwhile, Finance Minister AHM Mustafa Kamal has announced the budget for the new fiscal year 2020-21. Several steps have also been taken for the capital market in the proposed budget. In particular, undisclosed funds in the capital market have been given the opportunity to be invested subject to conditions. Some tax exemptions have also been given but market participants feel that these are not enough for the current dampened capital market. As a result, the market has not yet shown any positive trend riding on the back of some opportunities announced in the budget.

According to the sources, the stock market transactions ended in the fall in the outgoing week. There were 5 days of transactions during the last week. Down the week, the index was down for three days and slightly up for two days. At the same time, both the amount of money and the share prices of most of the companies participated in the transaction have decreased.

Mizanur Rashid Chowdhury, president of the Bangladesh Capital Market Investors Unity Council, told The Business Post that ordinary investors did not have the slightest confidence in the previous commission. But we have high expectations from the new commission. Although trading in the capital market has started, many have not yet become active due to coronavirus. And the demands we made in the budget were not met except the investment of black money in the stocks. As a result, many will not invest here out of fear and it is less likely to have a positive impact on the market.

Professor Abu Ahmed, a capital market expert, told The Business Post that the time has not yet come to judge the success or failure of the new commission. It is only a month after they have taken charge. That also during the coronavirus epidemic. If the situation in the country is a little normal, the momentum will return to the capital market. However, in this year's proposed budget, special initiatives should have been taken for the capital market, but that did not happen. There is no alternative to strengthening the capital market to make the country's economy dynamic.

Meanwhile, the BSEC has demanded the repeal of the proposed 3-year lock-in condition for investing undisclosed money in the final budget the restoration of bourses. In addition, some other demands have been made including reduction of tax rate of listed companies. BSEC Chairman Prof Shibli Rubaiyat-ul-Islam sported these demands with Abu Hena Rahmatul Munim, Chairman of National Board of Revenue (NBR) in a meeting on Thursday (June 18). 

BSEC Executive Director and Spokesperson Md. Saifur Rahman said in consultation with the NBR, BSEC chairman has proposed 3-year lock-in withdrawal of undisclosed money in the budget for investment in the stock market, raising the tax-free income limit on dividends from the existing Tk 50,000 to Tk 150,000, decrease the tax rate for listed companies and reduce the withholding tax rate on share transactions from 0.05% to 0.015% and the merchant bank tax rate from 37.50 to 32.50%.