No confidence in capital market

No confidence in capital market


Investors do not have confidence in the capital market since the market crash five years ago, in 2010. It is still a loss of capital market, with no dividends on investments in large and small companies. As a result, there is no interest among the investors to return to the market.There is a crisis of buyers in the market for a long time now, as the shares do not yield profit. As a result, no one is selling the shares at a loss and no one is buying.Former deputy governor of Bangladesh Bank and the head of the investigation committee formed after the share market crash in 2010, Khandaker Ibrahim Khaled said, the investors do not have confidence in Bangladesh Security and Exchange Commission (BSEC), though the organisation was reformed after the scandal. Changes at the top level of the regulatory body might help.Talking about the distrust in the capital market and the overall situation, BSEC chairman Khairul Hossain said, “Who has the magic to restore the trust of the investors in the market?”Talking about Ibrahim Khaled’s suggestion for changing the BSEC chairman post, the chairman said, “He is a senior person. He can say so. But only he can decipher the logic of his suggestion.”On the other hand, the investors also have questions about the quality of the companies listed in recent times. The reason is, share prices of the companies went lower than the Initial Public Offering (IPO) price.Regent Textiles is a recent example. The company sold its shares at Tk 25 per share, which included Tk 10 face value and Tk 15 as premier. However, the share price of that company went lower than the IPO price in just after two days of trading.

Share trading of the another company of the textile sector, Hamid Fabrics started on last December with the total value of Tk 35 per share. The market price of the share came down to Tk 21 within a year. The company announced 15 per cent cash and 5 per cent bonus dividend for the shareholders after getting listed in the market. A total of 200 shares were provided in each lot. Accordingly, every investor had to pay Tk 7,000 for the lot of 200 shares.Talking about approving IPO of devalued companies, BSEC chairman said, none of the good companies will enter the market with the face value of Tk 10. That is why some companies are allowed to enter the market on face value.Market-related people said the market is not getting any new investors as there is a lack of confidence. Though the share price is favourable for new investment, there is a lack of buyers in the market.According to former DSE chairman Shakil Rizvi, the current market is good for buyers but not for the sellers. “But,” Rizvi said, “There are not enough buyers in the buyer-friendly market.”Rizvi termed lack of confidence in the market as the reason of not getting expected buyers. Shakil Rizvi is an owner of a brokerage house. The investors trade in the share market through brokerage house.Tiklu Kanti Das of Chittagong is one of the share market investors among thousands in the country.

The mention of the share market is stressful for him. He went bankrupt after investing in the market. He is not even getting back his investment though waiting for years. He stays away from the share as much as possible.The financial conditions of the brokerage houses are not good either. Many organisations have cut down on staff to cope.Those involved in the share market say, there have been some basic changes in the last five years, including share market demutualisation, forming special tribunal for the hearing of the share market related cases, upgrading the securities law. However, these legal and structural changes and not yielded any positive results.Khandaker Ibrahim Khaled thinks the market is still in the hands of a vicious circle as dubious companies.
source:prothom alo


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