WB assistance underway to develop secondary bond market
Finance Minister AHM Mustafa Kamal said on Thursday all newly established good public sector companies would come to the capital market to ensure availability of good shares in the market.
The finance minister's announcement came amid prolonged market volatility and continued fall of stock prices, panicking investors of all categories alike.
Kamal also said that he could not understand the reasons behind the recent market behavior.
He said steps were underway to bring newly established and good public sector companies to the capital market with the view to build investors' confidence in the market.
"For the capital market, we have good instruments. All the new, good public companies will go to the capital market. The market will be good. We are working on it with the assistance of the World Bank (WB)," Kamal told reporters after a meeting with the WB Group's director Zoubida Kherous Allaoua at his Agargaon office.
Kamal said he did everything in the past as per the demand of the capital market stakeholders with the view to improve trade patterns and protect the investors' fund.
He said the country's economy was performing well in every area except for the capital market.
In recent times, a good number of public sector companies with strong capital bases were created in the areas of infrastructure and power. Metro rail, Elevated Expressway and Bangabandhu Satellite are a few of them.
The DSE on Wednesday lost 75 points in the benchmark index due to fall in prices of majority of the scrips.
"I failed to understand why it (frequent fall in prices) is happening. It seems that our capital market is isolated. It is totally disintegrated. As if the market is not aligned with our mainstream economy," he observed.
Kamal said he would soon sit with the capital market people (stakeholders) to identify bottlenecks and find solutions.
He said he discussed the matter with the visiting WB delegation led by the global lender's director Zoubida Kherous Allaoua at his office.
He said the WB was assisting the government to develop a secondary bond market aiming to reduce the dependency on the banking sector for liquidity support to implement large projects.
"On Friday, our main thrust was how we can develop our capital market. We will have to develop our capital market because we want to give some relief to the banks to meet the financing requirement," he said.
The finance minister also viewed that the banking sector was experiencing a mismatch in assets and deposits due to long-term lending with short-term deposits.
"The WB is helping here," said the finance minister, adding, "The mismatch will be eliminated once we develop a bond market. The bond market would help build a strong capital market."
The finance minister said Prime Minister agreed to bring corporate funds to bond market.
He said private and public players would join the bond market.
“The WB is working on it for regulatory reform and policy advocacy. It is a coordinated approach being applied currently. They (WB team) have already identified some bottlenecks and prospects. Combined efforts will be there. We have government instruments. Corporate houses would also come forward."
Replying to a question, the finance minister said: "We do not have any shortage of money.”
He said the banking sector had surplus funds worth Tk92,000 crore as of June 2019.
"Tell me where the government has gone for money? We do not print money like the US government.”
He said the government was quite comfortable with the lowest debt-GDP ratio of 34%.
WB director Zoubida Kherous Allaoua said she discussed the creation of a secondary bond market with the finance minister.
She further said access to finance by the corporate was extremely important to obtain the desired economic growth.
She said building a vibrant debt market was part of creating scope of long-term finance for infrastructure and other development projects, which were the key to growth.