BSEC extends credit facility to boost liquidity flow into stocks

Business Desk :
The Bangladesh Securities and Exchange Commission (BSEC) has declared that investors will get credit facility for investing in equity-backed securities with price-to-earnings (P/E) ratio up to 50 if the securities have been listed in the ‘A’ category for at least the preceding three years.
The latest directive from the securities regulator issued on Tuesday also said the current paid-up capital of the securities should not be less than Tk50 crore to be invested in with the fund from margin loans.
The order cancelled out the previous directive issued 12 years ago, according to which lenders could disburse margin loans for investments in securities having P/E ratio of 40 or less.
The equity-backed securities with P/E ratio above 40 will not be treated as marginable even now unless the instruments have been in the category A for the last 3 years and the paid-up capital of the companies is Tk50 crore or more.
Asked about the reason behind the decision, BSEC Executive Director Mohammad Rezaul Karim said investors would be inspired to inject money in good, fundamental companies.
The market will see increased liquidity flow as more companies will be included as marginable securities, he also said.
The Capital Market Stabilization Fund (CMSF) recently has come up with a decision to provide market intermediaries with loans at lower interest rates.
As a result, the merchant bankers and stock brokers will be able to invest such funds and disburse margin loans from the funds to their clients.
Karim said investors would be able to invest money from margin loans, disbursed by the CMSF, in the companies having P/E ratio above 40 but not more than 50.
Market intermediaries had placed a demand in this regard, he added.