- 91 companies listed on the capital market in the last 7-8 years
- Half of their share prices have now halved
- 98% of private investments come from banks, only 2% from the capital market
- Tax differentials between listed and unlisted companies should be widened to attract good companies
Restoring investor confidence in the capital market is not possible, even with increased financial literacy, unless good governance is ensured, Dhaka Stock Exchange (DSE) Chairman Yunusur Rahman said at a round table on Saturday.
In the last seven to eight years, 91 companies have been listed on the capital market. But most of them failed to live up to their shareholders’ expectations and ended up hitting them, as the chairman of the DSE, also a former finance minister, noted at the event titled “Current Scenario and Outlook of Bangladesh Capital Market” at City Hotel.
The Capital Market Journalists Forum and the Bangladesh Merchant Bankers Association (BMBA) jointly organized this program.
Farooq Ahmed Siddiqui, former chairman of the Bangladesh Securities and Exchange Commission (BSEC), said few good companies have entered the capital market in the past 10 years as most of them get long-term loans from banks when they need money.
He explained the situation, pointing out that 98% of private sector investment comes from banks, while the share of the capital market is only 2%.
“This is a serious problem with the capital market. It doesn’t get better without good companies,” he also said.
Responding to the criticism of the capital market, BSEC Chairman Professor Shibli Rubaiyat-ul Islam said: “We should also think about who we are comparing the market to while criticizing it.”
“Don’t India and the US have junk stocks?” he asked, asking to be updated on how many businesses are closing each day in the two countries.
Regarding stock market manipulation, the BSEC chairman said it takes six months to a year to identify a stock market gambler in the existing system.
“We can act if the exchange presents the investigation report in a timely manner. It usually takes six months to a year to examine the evidence and punish the culprit,” he said.
Shibli Rubayet-Ul Islam said various measures have been taken to establish good governance. Action was also taken against those involved in manipulations on the basis of investigations.
They have also taken initiatives to bring good companies to market, he added.
BSEC former chairman Dr. M. Khairul Hossain 40% of IPO shares in India are below par, while in Bangladesh it will be no more than 10%.
He believes. “The number of non-compliant companies in Bangladesh is lower than in any country in the world.”
The BSEC chairman said: “It’s not my job to ask anyone to invest in the capital market. Also, I’m not supposed to do roadshows abroad, but I’m doing it in the national interest.”
“We get good feedback on the roadshows. We have organized roadshows in district cities across the country, in the future we will also do this at district level.”
Capital markets analyst Professor Abu Ahmed suggested further widening the tax gap between listed and unlisted companies to attract good companies to the capital market.
The tax gap between listed and unlisted companies used to be 10%, but in the current budget it has been reduced to 7.5%.
Speaking about it, he said that if the tax gap is widened, good multinational companies will come to the capital market.
Contrary to him, former BSEC chairman Farooq Ahmed Siddiqui said even if the tax rate differential between listed and unlisted companies widens, companies will not enter the market because they can get long-term loans from banks very easily.
Md Moniruzzaman, Vice President of the Bangladesh Merchant Bankers Association, delivered a keynote speech on the program and said despite many ups and downs, there is a long-term growth trajectory.
He said there are many opportunities to increase the number of investors in the capital market in the future as FDR accounts in the country are now 48.7 lakh and there are shares in 14 lakh BO accounts.
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