Big firms still staying away from stock market: BSEC

Big companies in Bangladesh are reluctant to get listed on the stock market in spite of tax benefits to avoid coming under the regulators' scanners, said a top official of the Bangladesh Securities and Exchange Commission yesterday.

With a view to attracting much-needed quality stocks to the market, the government is extending 5 to 10 percent tax waiver to listed companies. But, listed companies have to comply with certain rules and regulations -- a daunting prospect for many.

“So, many well-performing companies are staying away from the stock market,” said Farhad Ahmed, executive director of BSEC.

Ahmed's comments came at a press briefing yesterday to announce the BSEC's participation in the World Investor Week, a global campaign to raise awareness about the importance of investor education and protection and highlight the various initiatives of securities regulators in these two critical areas.

“Bangladesh is logging good GDP growth, so banks will not be able to cover the huge demand for finance from our entrepreneurs. So, they have to turn to the stock market in future,” he added.

The country's stock market is based on small investors, who lack the ability to make informed decision, said Md Saifur Rahman, executive director of BSEC.

They mostly operate on the basis of rumours, which more often than not send them towards junk stocks and poorly performing companies.

“We have a category system on the basis of stock's performance, so that investors can make informed decisions. This is rare in other stock markets.”

Rahman, who is also the spokesperson of the BSEC, said the regulator often warns investors of the junk stocks and even imparts training on the stock market from time to time.

And still they are rushing towards those stocks, sending their prices soaring, he said, adding that the BSEC took some steps against the stocks recently. BSEC is also trying to extend institutional investors' base, Rahman added.

As a member of the International Organisation of Securities Commission (IOSCO), the BSEC will organise a week-long programme from October 7 to celebrate the World Investor Week.

IOSCO is the international body that brings together the world's securities regulators and is recognised as the global standard setter for the securities sector.

It develops, implements and promotes adherence to internationally recognised standards for securities regulation.

A total of 84 countries are observing the week this year along with seven regional and global organisations. 

Md Mahbubul Alam, executive director of BSEC, was also present at the briefing.