Home ›› 21 Aug 2020 ›› World Biz
After a long recession, the country's capital market has finally started moving towards normalcy, thanks to the floor prices which don’t allow share prices to nosedive below the opening prices. Investors are slowly regaining confidence in the capital market. The index and transactions have also touched a few records in the last few days. At the same time, the market capitalisation is increasing.
From the last week of July, the country's two stock exchanges began to break the cycle of decline. After the Eid holiday, the capital market has started to be much normal since the beginning of August. Indices and transactions are increasing almost every day. There is some relief among investors as the capital market returns to an upward trend after a sharp fall in prices.
Bangladesh's stock market began to decline under the influence of coronavirus in the world. However, after the detection of coronavirus in Bangladesh, it led to a catastrophe. As a result, almost all share prices are devalued. The list also included shares of companies that would not be affected by the coronavirus. Many panicked investors became desperate to sell.
To overcome this crisis, the former chairman of the Bangladesh Securities and Exchange Commission (BSEC) M Khairul Hossain in consultation with the higher echelons of the government directed the floor price. The floor price (minimum limit) is then fixed on all shares and units to protect investors. Ordinary investors take that decision as a blessing.
However, many people in the market are critical of fixing the floor price. Despite their criticism, the current chairman of the BSEC, Professor Shibli Rubaiyat-ul-Islam, is adamant in his support of the floor price directive. Based on that floor price, thousands of crores of taka are being traded in the market and almost all the companies have risen above the floor price.
In this regard, the Chairman of the Bangladesh Securities and Exchange Commission (BSEC) Professor Shibli Rubaiyat-ul-Islam said to The Business Post, whatever is needed for the development of the stock market, everything will be done. The capital market is a very important part of a country's economy. Our country's economy is moving forward. At the same time, the stock market is moving forward. The commission is working to make this market a bigger player in GDP in the future.
BSEC chairman said that in the meantime, the BSEC has approved an action plan for efficient surveillance activities to ensure greater transparency and accountability in transactions in the secondary market. In addition, in order to bring good governance among the 'Z' category companies in the stock market, various decisions have been taken including sale, transfer and pledge of shares of entrepreneurs and managers.
According to BSEC sources, the commission has decided to transact in the 'Z' category for various reasons by amending the required section of the Stock Exchange (Settlement of Transactions) Regulations, 2013. Of these, the company that failed to pay cash dividends for two consecutive years will be traded in the 'Z' category. Companies that fail to hold AGM for two consecutive years will also trade in the 'Z' category.
In this regard, DSE Director Rakibur Rahman said to The Business Post that the stock market will move forward if good governance, rule of law and corruption can be eradicated. At the same time, the desired target will be met. Therefore, the present Commission cannot deviate in any way from their ongoing reform process. Due to the various measures taken by the present commission, the confidence of the general investors towards the capital market has already started to return. If it can be maintained, further development of the capital market will take place.
Meanwhile, various individuals and organizations, led by BSEC Chairman Prof Shibli Rubaiyat-ul-Islam, have been fined Tk 42.5 crore in the last one and a half months due to various irregularities in the stock market. Stakeholders feel that a message of establishing good governance in the market has already been given through this. The people concerned with the capital market have demanded to maintain this trend in the future as well.
Dhaka Stock Exchange (DSE) director Shakil Rizvi told The Business Post that there was frustration among investors. That is out of place now. In this case, the new commission has imposed heavy financial penalties and rejected the initial public offering (IPO) application of some companies. This continuity must be maintained. However, some of them will try to take the opportunity. They have to be kept under surveillance.
sr/wi
