Bangladesh's bourses have been going through a prolonged lull as the Bangladesh Securities and Exchange Commission (BSEC) keeps shifting from one directive to the other, often without considering the implications of its decision on the market.
Assuming that BSEC intends to support the market, its policy guideline has not caused much market ripple, rather the market continues to slide south.
These are troubling times, and measures by the BSEC or the government have not resonated well with public sentiment.
Many issues need to be considered legally and factually before a policy is introduced.
However, rampant interference, selective interference and market manipulation are the key causes of no confidence in the capital market.
While the BSEC is an independent body, it is perhaps not showing its autonomy in its introduction of market measures.
Recent list of floor pricings show that Beximco and few other group shares were omitted, but clearly there are no reasons for giving such privilege.
These directives signal an eerie feeling that the securities regulator is not independent in taking decisions or else incompetence has gripped it.
Therefore, the BSEC needs to reorganize itself, bring more clarity, transparency and accountability in its governance within its rank and file.
These logical views and policy issues need addressing as early as possible to regain investor confidence.
Without uprooting the root cause, cosmetic changes in both Dhaka and Chittagong Stock Exchanges would be similar to playing with fire.
Already this manipulation has caused the market to go south.
Now, the market is in intensive care units (ICU) due to repeated failure in policy.
Statistics
Even 4-6 months ago, Tk700-Tk1,000 crore worth of stock transactions took place on a daily basis, but now it ranges between Tk200-Tk250 crore daily.
This approximates more than a 70% drop in daily trade volume.
Is it a signal of a vibrant economy, absolutely not.
With so many shares hitting floor prices (a mechanism to arrest the fall of a share artificially), investor confidence has dwindled remarkably.
The issues of floor price setting, resetting and setting drop and price hike ranges have all contributed to "no confidence" in the capital market.
Honestly, large investors will clearly shy away from these artificial measures installed by the BSEC.
Does BSEC take macro level public sentiments into their decision making?
The government has scored almost a zero in this domain.
No one in the government seems to pay attention to the consequence of market failure.
Market failure will cause a serious economic crisis, accelerating further economic downturn.
Vigilance in this arena by the government has been dismal.
I have touched upon macro views on the market and economy where distrust for qualified reasons have gripped the overall psyche of the nation.
Many other negative news and rampant corruption dot in our media space, but next to no legal measures are to be seen, causing our national hope index (imaginary) to hit all-time lows.
Had there been a proper barometer to gauge the voter confidence in the government, I assume the government would have been more than mildly surprised.
The US-based PEW Center does similar reviews of their government.
It is a bellwether review on the US Government.
With these surveys, the government re-aligns itself, giving its citizens a better managed country.
In Bangladesh, we ought to build democratic and analytic organizations shortly so that the public opinion is properly understood and the government can act quickly to rectify any discrepancies and policy error, allowing a strong balancing mechanism for all parties to remain vigilant in their fiduciary duties.
Unfortunately, our government wants to be miles away from initiating such designs to run the country more effectively.
Without proper systems of governance and democracy, no amount of medication will work. All will be futile exercise.
Without a proper democracy, we continue to waste our energy hoping to correct things.
Hence, let us envision for an emancipated country with a full brown economy and capital markets under a well-planned democracy.
In conclusion, can Bangladesh deliver better in 2023 in regard to capital market growth?
Yes, this remains a vital question for the nation in 2023.
Let us ascend in that journey with proper policy guidelines, prescription and less intervention by the BSEC, Bangladesh Bank and other fiscal and monetary regimes.
The author is CEO and legal adviser of International Institute of Technology and Management (IITM)
Opinions expressed within the article are solely the author's own and do not reflect the opinions and beliefs of Dhaka Tribune
