'Shares of a company, which is closed for 10 years, are being traded at higher prices through brokers. The exchanges are seeing who is buying and selling'
Private Industry and Investment Adviser to Prime Minister Salman F Rahman on Saturday said both Dhaka and Chittagong stock exchanges had to play an important role to stop foul play in the capital markets to build a sustainable market.
Addressing as chief guest a webinar titled "Towards Sustainable Deployment of Capital Market", Salman made the remark.
Capital Market Journalists' Forum (CMJF) and Bangladesh Merchant Bankers Association (BMBA) jointly organized the event. CMJF General Secretary Munir Hussain moderated the webinar
“If there is any foul play or manipulation in the share trading, the stock exchange can identify it first as it can see trading of shares through its monitoring board. The regulator comes to know much later than stock exchange,” said Salman
"For example, shares of a company, which is closed for 10 years, are being traded at higher prices through brokers. The exchanges are seeing who is buying and selling. So the manipulation is being done openly," said Salaman.
It is not only the duty of the government, Bangladesh Bank or the Bangladesh Securities and Exchange Commission (BSEC). Dhaka and Chittagong exchanges have a very important role to play and they have to gear up themselves, said Salman.
"We have new leadership in BSEC and the market will not only grow but also sustain with the economic growth. The stock exchanges have to be strong to this end," he added.
Meanwhile, the stakeholders also called to take steps to make the beneficiary owner account (BO) opening digital to attract more investors from home and living abroad.
BO account opening should be made digital to spread the capital market globally. If it is digital, it will be an advantage for foreign investors as many investors will be able to invest by opening an account at home, said Salman.
He also considered the performance of institutional investors low in the markets, a contrast from developed markets.
“As a result, we need to increase the number of institutional investors right now” he further remarked.
“Bangladesh still has a high risk-free national savings certificates (NSC) rate. We are now at a low interest rate regime in the banking system, which is helping businesses, as well as the capital market,” said Md Moniruzzaman, managing director of IDLC Investments Limited, in his keynote presentation.
He also said it was the right time for the local capital market of Bangladesh to rise globally, to harness the strong tailwind from economic growth.
BMBA President Md Sayadur Rahman, in his welcome address said that financial transparency on the part of listed companies was an important issue.
“We believe that the stock market regulator will take initiatives to list good companies in the capital market, for the sake of investors,” he added.
For this, the regulatory body should take the initiative to create a central database of financial reports for all stakeholders, the BMBA president said.
Prof Shibli Rubayat-Ul-Islam, the BSEC chairman, said: “We have already resolved some issues regarding the mutual funds, which is a positive move for this sector. The regulator is trying to increase transparency and accountability in mutual funds”.
“We are trying to increase financing for industrialization through the capital market. We will establish the concept that the capital market is the main source of funds for industrialization,” he further remarked.
Besides providing funds for investment, the new IPOs will also increase the stock market depth and supply of shares. However, the commission has to be cautious so that bad companies cannot offload their shares, he added.
Shibli also said that the DSE needed to bring about major changes in the IT sector.
"We are also working on reforms of the Investment Corporation of Bangladesh (ICB) and listed companies’ independent director panels," he also remarked.
FBCCI President Sheikh Fazle Fahim said: “We do not want to go to the bank for long-term funds. I want to raise funds from the capital market. Entrepreneurs are ready to take money from the capital market."
DCCI President Shams Mahmud demanded green field projects or companies to be listed in the capital market for the development of public infrastructure.