Economy, market behaviour frustrate BSEC chairman
Amid the downward trend of the market, DSE turnover hit to a 20-month low of Tk313 crore on Sunday as only a few stocks are trading freely above the floor price
The unforeseen crisis in the economy seems to have frustrated the Bangladesh Securities and Exchange Commission (BSEC) chairman, as it has been hurting the stock market's recovery that began with his tenure in mid-2020.
At a seminar titled "Prospects and Challenges of Bangladesh Capital Market" organised by the Economic Reporters Forum (ERF) in the capital on Monday, Professor Shibli Rubayat-Ul-Islam also blamed a dominant trend-chasing behaviour instead of buying the market dips, for the continuation of selling pressure.
"An investor asked me to take necessary measures to pop up the market as he was in need of money for groceries and I could not reply to him," he said pointing at the majority of investors' short-term orientation.
Amid the downward trend of the market, DSE turnover hit to a 20-month low of Tk313 crore on Sunday as only a few stocks are trading freely above the floor price.
The situation was also because of the regulator's controversial move not to allow stock prices to go down, which the BSEC chairman continues to defend citing the protection of unsophisticated retail investors.
Stuck investors neither want to absorb capital erosion, nor the absence of buyers in 80% of listed scrips.
The Ukraine war, which is impacting global fuel and food prices, has pushed Bangladesh, a nation having surplus power generation capacity and food sufficiency, into austerity for the sake of saving foreign currency reserves, the BSEC chairman said.
"I had to call the managing directors of 20 commercial banks for a letter of credit for imports. I never called any bank MD with such requests before," said entrepreneur Azam J Chowdhury, former president of the Bangladesh Association of Publicly Listed Companies.
The BSEC chairman shared the common frustration in the country's stock market that sharply bounced back from a multi-year low of 3,600-4,000 level for the broad-based index DSEX during the first wave of the Covid-19 and in 15 months it soared to over 7,300 and spiralled down to 6,212 on Monday.
Unlike the peer country's stock market bull runs are much more short-lived here in Bangladesh and it is because of the over-dependency on demand creation in the secondary market, said Bangladesh Merchant Bankers Association Vice President Md Moniruzzaman.
DSE Chairman Md Eunusur Rahman and Chittagong Stock Exchange Chairman Asif Ibrahim also expressed their thoughts on the prospects and challenges of the capital market.
ERF General Secretary SM Rashedul Islam moderated the seminar presided over by its President Sharmeen Rinvy.
Former ERF president Sultan Mahmud and general secretary Ziaur Rahman also spoke on the occasion.
Most of them made suggestions for better addressing the governance and structural issues in the market as the last leg of the market rally included too much manipulation of stock prices.
DSEX, in its second straight session of decline, fell by 0.19% to 6,212 on Monday.
