Stockmarket to be vibrant in two years: Muhith
Finance Minister AMA Muhith is expecting a 'vibrant' capital market in the next two years, which is good news for stock investors who have passed tough days since the price debacle almost six years ago.
“Massive reforms in the last 3-4 years have brought in stability in the market and in the regulatory arena. The foundation has been built and we can move forward based on this development.”
The minister said he is not as worried now as he was in the last five years after the inevitable market crash in 2011. “The situation was distressing for me, but now I am satisfied with the development.”
With stability in the market, he expects that more and more companies will be listed on the market in the coming days.
He was speaking at a seminar on “Bangladesh capital market: present scenario and future prospect”, organised by Bangladesh Merchant Bankers Association (BMBA) at Sonargaon Hotel in Dhaka yesterday.
M Khairul Hossain, chairman of Bangladesh Securities and Exchange Commission, said there are many state-owned enterprises under different ministries, but they are not being listed on the capital market due to their internal strategies.
He requested Muhith to sit with the ministries and take necessary steps to bring the state-owned enterprises to the stockmarket.
“We also have to find the reasons why multinational companies are not interested in coming to the stockmarket.”
The participation of institutional investors in the capital market is only 8 percent here, while it is 70 percent in the US market and 50 percent in India.
Hossain also requested the finance minister to utilise the capital market as an alternative source of financing for its development expenditure.
“You (the finance minister) are planning to announce a Tk 5 lakh crore budget for next fiscal year. Instead of borrowing from the banking channel, you can use the capital market as an alternative source of financing.”
Presenting a keynote paper, Md Moniruzzaman, former vice-president of BMBA, said although listed firms enjoy better tax rates compared with non-listed firms, many good companies are not still listed.
Indian state-run Coal India raised $3.4 billion by offloading its shares at an attractive price after a market crash in 2008, to make the market more vibrant, he said.
He said it is necessary to allow the provident funds to be invested in the secondary market, as the current law is not clear.
“Creating pension funds and allowing a portion to be invested in listed equities is also necessary, and global experience can be followed in this regard,” said Moniruzzaman, also managing director of IDLC Investments.
BMBA President Md Sayadur Rahman demanded policy support to get credit from financial institutions at a simple interest rate.
“We need this policy support as almost all the merchant banks are facing negative equity following the price debacle six years back.”
State Minister for Finance and Planning MA Mannan also spoke.
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