The Dhaka Stock Exchange (DSE) has adopted a comprehensive business plan for the first time to bring investors’ confidence from the brink through smooth functioning of the stock market, its new president said Tuesday.
The market has been suffering from confidence crisis since its debacle in December 2010. The benchmark index of the premier bourse lost nearly half of its value in the last two and half years.
The business plan as well as the demutualisation process sketched out by the prime bourse will be submitted by this month for consideration by the Bangladesh Securities and Exchange Commission.
“We need to have a comprehensive business plan for smooth functioning of the stock market,” newly elected DSE President Ahsanul Islam Titu told the Dhaka Tribune.
Under the plan, the process of initial public offering would be made faster, new products would be introduced, bond market would be activated and infrastructure for demutulisation would be developed.
“Once implemented, the plan we have taken might restore stability in the market,” he said.
The country’s stock market is only equity-based and lacks quality stocks for long. “We need to diversify the trading option like derivatives to minimise the risks of investment,” said the DSE president.
“I believe in deeds, not in words,” said Titu. The DSE will also make efforts to woo good companies to be listed as quality stocks attract investors. “This will help bring depth in the market and ensure balance between demand and supply,” he said.
The bourse has also a plan to devise a mechanism to bring back investors having negative equity following the market debacle in 2010. “A step will be taken to heal the wounds of the affected investors,” he added.
But the major challenge now is to implement the demutulisation, he said. The parliament passed Demutualisation Act 2013 on April 29 to separate the bourses’ management from the ownership to bring transparency to the market.
As per the law, the stock exchanges will submit a demutualisation scheme to BSEC within 90 days after the notice, and the regulator will approve it in the next 60 days.
The existing board will be dissolved with the regulatory approval, according to the law, and thus the new office bearers of the DSE will get six-month tenure.
About the market, Titu said the bright days are ahead for the stock exchanges.
“Entrepreneurs will not go for long term investment ahead of the national election, which is just round the corner. This means enough fund surplus in the banking system. And surplus means interest rate will come down, paving the way for entry of the liquidity in the stock market.”
He said volatility shook the market over the years as investors were still edgy over the market’s direction, because they are yet to come round from the setback suffered by the market debacle.
