Finance Minister AMA Muhith yesterday said the country’s stock market have been very strong and stable for last two years – a unique situation of the market seen ever before.
“Journalists were writing wrong reports on stock market in last five years as they talked much about the market which was incorrect,” he told journalists, after a meeting with chairmen and managing directors of state-owned banks, insurance companies and financial institutions.
“We have amended the rules and regulations for development of the capital market. As a result, the businessmen are coming to the market for capital instead of credit from the commercial banks,” said the minister.
He said the index of stock market rose substantially in the last years, but there were ups and downs in the stock market while a crash is a normal situation.
In late 2010, the market started sliding and gradually fell to its worst before stabilising at a low level with the then benchmark index DGEN (now defunct) remaining around 4,000 points, leaving investors particularly small ones to lose all the money.
In 2013, the Dhaka Stock Exchange (DSE) benchmark index registered more than 4% gain to close at 4,266. The DSEX was under severe pressure from the starting of the year and fell as low as 3438 on 30, April.
Strikingly, the volume of trade fell 6% and daily average turnover was down 5% to Tk400 crore.
Former finance adviser to the last caretaker government Mirza Azizul Islam earlier said: “The market was undoubtedly undervalued last year if the current price-earnings ratio was taken into account.”
In 2013, price-earnings ratio stood at 15, according to the DSE. “Investors are yet to heal the wounds of market crash in late 2010, which reflects in the lower turnovers and flat growth of indices,” he said.
The DSE saw its market capitalisation increase 11% in 2013, spearheaded by a general increase in initial public offerings (IPOs). The total market capitalisation is Tk 264,779 crore which is 25.6% of the gross domestic product.
During the year, 17 new securities were listed on the DSE, which raised more than Tk1,000 crore through IPOs. Of the new securities, 15 were equity stocks that raised Tk833 crore and two mutual funds worth Tk100 crore each.
Bankers advised to be cautious about fund embezzlement
Muhith also directed the bankers and officials of financial institutions to be cautious about the embezzlement of money, reducing rate of default loans and adjusting the bank loan exposure in different sectors.
He further directed the officials of financial institutions to take own work plans and let the authorities concerned informed.
Replying to a question, he said the government has no plan about how long it would stay in power, but any programme should be taken for five years whichever government comes to power.
