Capital market struggling with a lack of confidence, governance: the stakeholders

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A file photo shows investors monitoring share price movements on computer screens at a brokerage in the capital Dhaka. — New Age Photo

Bangladesh’s stock market is still grappling with lack of investor confidence for various issues including lack of governance and good quality companies, manipulation and poor diversification, panellists said on a show. Saturday.

They made the comment during a panel discussion titled “Current Scenario and Prospects of Bangladesh Capital Market” held at the Westin Hotel in the capital Dhaka.

Dhaka Stock Exchange Chairman Eunusur Rahman said the market was struggling with two major issues: governance and trust.

“If we can’t improve market governance and protect investors, no initiative will work,” he said.

“We need to stop scams like Crest Securities that have embezzled a huge amount of money from investors,” he said.

He said: ‘The DSE Board found that 91 companies were listed on the stock market under the previous commission and that 50% of the companies are now trading below face value.’

Institutions and regulators that played a role in enlisting these companies should uncover their shortcomings to fix the problems, he said.

University of Dhaka Honorary Professor of Economics Abu Ahmed said the market was running with “undesirable and diseased” companies.

Of the 350 companies listed, a few could be considered successful, he added.

Ahmed said investors had less confidence in the mutual fund industry and the securities commission could also be held responsible for the situation, as it extended the duration of closed-end funds and allowed bonus dividends. .

Good multinationals, including Unilever and Nestlé, do not go public despite the country’s huge revenues, he said.

He said the government had narrowed the tax rate differential between listed and unlisted companies, which was not a good move as it would eventually discourage companies from listing in the market.

Faruq Ahmad Siddiqi, former chairman of the Securities and Exchange Commission of Bangladesh, said: “Our stock market is not developing properly. Good businesses are not coming to market and opportunities are not being created for new businesses to come.

“When banks are ready to provide long-term financing to good companies, they will not come to the market even if they have tax exemptions, because there are many ways to avoid tax in the country”, did he declare.

There are many rules and regulations, but implementing the rules is difficult, he said.

Al Amin, an associate professor at the University of Dhaka, called for ensuring transparency in the financial statements of listed companies and good governance in company operations to protect investors’ rights.

BSEC Chairman Shibli Rubayat-Ul-Islam said, “Principles and ideas written in books cannot always be followed because the practical world is totally different.

The request for “books” cannot be made in many cases and many decisions must be made taking into account reality,” he said.

The commission is trying to recruit successful companies as well as public companies in the stock market soon, he said.

Shibli also said that the country’s revenue would increase once the right companies entered the market because they could not escape taxes.

The BSEC chairman said the mutual fund industry is starting to improve now.

The commission has taken a step that asset management firms will charge a fee to funds under their management based on fund performance which would further improve the industry, he added.

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