We Should Uphold The Image Of Our Capital Market
Md. Muzibur Rahman :
Recent turmoil in the capital market of Bangladesh is a great concern of both the stakeholders & the investors themselves. Because nobody wants an untoward situation or instability of the market which will affect the market negatively. The general investors’ forum wants the early resignation of the BSEC chairman raising the demand for their continuous share price falls which is the result of great losses of their capital invested. Maximum shares of the market are under value irrespective of good fundamentals or bad fundamentals. Many good shares price is under their net asset value (NAV) & recently they are going down without any reason.
Many think tanks explain it because of political instability & unstable government. But actually these may not be the only reasons. The actual reason may be 1) lack of confidence among the investors, 2) instability of the financial & non-financial sectors, 3) market inflation, 4) dollar price fluctuations, 5) low reserve & so on. But these factors are now improving day by day which are the green signals for market stability & improvement in the near future.
We know that the stock market is the indicator of national economy & strong infrastructure & medium worldwide to engage in the production process of all idle & surplus money of small investors with a well, organized, transparent & with control mechanism. It directly helps to supply capital to the Industry/Company & business. When we need capital for funding our companies/organizations, what do we think? We think about the sources of money to get the fund & invest accordingly. Among all other sources, we can think of our capital market/share market to manage funds for financing our businesses & industry.
Thus a stock market can help a nation for its economic growth & development. It directly or indirectly contributes for wealth creation & employment. It helps also for resource creation, distribution, diversification of economic activities, diversification of people’s income & their portfolios. Over 3 million people directly or indirectly are engaged in the trading of the Bangladesh stock market.
The number of investors may rise & increase day by day if we can make the market stable & transparent. It is helping partially to solve unemployment problems. Many unemployed youths, students, retired officials & other adult persons directly or indirectly are involved with the stock market. It can be a source of long term financing for infrastructures & industrialization. There is a correlation between the development of the economy & capital market. Mega projects/big infrastructures can avail these opportunities for collecting capital from stock market avoiding high interest rate of bank loans or foreign loans.
We are dreaming of a strong, vibrant & transparent stock market because a strong stock market indicates a strong economy. The Bangladesh Securities and Exchange Commission (BSEC) was established on 8th June, 1993 as the regulator of the country’s capital market under the provision of Bangladesh Securities and Exchange Commission Act 1993. The purpose of the Commission is to smooth supply of capital to the business & industry according to their needs, create more employment opportunities among the people, protect the interest of investors in securities, develop the securities market and make rules for matters connected therewith or ancillary thereto.
The Commission consists of the Chairman and four Commissioners who are appointed for full time by the Government. The Chairman acts as the Chief Executive of the Commission. The Commission is a statutory body attached to the Ministry of Finance. On the other hand, Bangladesh Bank (BB), the central bank and apex regulatory body for the country’s monetary and financial system. BB performs all the core functions of a typical monetary and financial sector regulator, and a number of other non-core functions. Both of them are the government institutions that are performing for sound implementations of economic & financial policies of the country. They are not contrary to each other but complementary for the execution of the government’s economic & development policies. But we should give rational (true) comments on the market. So far, we know that both the regulators (BSEC & BB) are working for the positive development of the stock market.
We think & hope that both the regulators & stakeholders will perform coordinated efforts to develop the stock market for the sake of the nation. Rumors/untruth comments in the social & news media on the stock market disappoint the small investors which reflect on the market. Secondly internal conflicts of the market affect negatively. Instability in the stock market discourages home investors, Foreign Direct Investment (FDI) & foreign investors. So, we should remove all dishonesty, manipulation, frauds, illegal transactions in the market & uphold the image & good reputation of the market above all.
We should have a clear policy in the budget about this sector. Rational comments & suggestions should come from our think tanks & stakeholders to regain confidence, stability in the market.
(The author writes on economic, development & rising issues & can be reached at: E-mail: [email protected])