Kamal promises budget remedy for stock wounds

Finance Minister AHM Mustafa Kamal has assured investors that there would definitely be something for the capital market in the budget to be unveiled next month.

He made the comments at the inaugural of the Dhaka Stock Exchange’s (DSE) separate trading platform for small companies at the Pan Pacific Sonargaon hotel in Dhaka on Tuesday night.

The DSE, which organised the event, said the move would provide opportunities to small and medium-sized companies to raise funds from the stock market.

Addressing the occasion, the finance minister said the capital market was the mirror of an economy, and as the economy was on the right track, the market should not lag behind in keeping pace with the economic growth.

Kamal also talked on the present market trend and advised investors not to take hasty decisions.

“The investors who have already sold their shares amid the downturn will be loser,” he said.

On introducing the new platform, the minister said this was a great opportunity for the SME sector as they can raise funds from the market despite having low capital.

The platform will be a financing solution for the SME sector, an important driver of the economy as it creates a huge number of jobs, said M Khairul Hossain, chairman of the Bangladesh Securities and Exchange Commission (BSEC).

Small and medium public limited companies are eligible to raise funds if they get listed on the DSE SME board.

After the fund is raised, the listed company’s paid-up capital will have to be between Tk 5 crore and Tk 30 crore, whereas a company has to have a paid-up capital of at least Tk 30 crore if it wants to raise money through the main board.

Under the new board, SMEs are not needed to make profit in the three consecutive years before they go public, whereas it was mandatory for listing on the main board.

Companies listed on the small-cap board will also be exempted from publishing quarterly reports.

Kazi Firoz Rashid, chairman of Kazi Firoz Rashid Securities, said there was a horrifying crisis in the stockmarket now as investors were losing money every day.

As the market is not in a good mood, the stock brokers are also facing a very tough situation in running operations, he added.

Rashid, also a presidium member of Jatiya Party and a lawmaker, said the BSEC has approved many stocks in the last seven years that became junks, which inflicted losses on the investors who held the under-performing stocks.

Subsequently, Rashid recommend formation of a commission to justify the approval process and punish the issue managers, which managed the junk stocks.

In response, the finance minister told the BSEC chairman to not get nervous. He also asked to take action, saying the commission knows well who the issuers and issue managers were and the rule about it.

Hossain said the market was going through volatility so the commission was taking many steps, such as on the sales of placement shares and tax issue related to dividend income. The BSEC is working to develop the bond market as it is a very important product for the stockmarket, he said.

KAM Majedur Rahman, managing director of the DSE, said if a company wants to raise funds through the book building system with premium, the minimum paid-up capital would have to be Tk 10 crore before the fund was raised. 

Only qualified investors can subscribe to the issues offered by the SMEs.

The qualified investors are merchant bankers and portfolio managers, asset management companies, mutual funds, stock dealers, financial institutions, resident or non-resident Bangladeshis having a minimum net worth of Tk 1 crore, or other institutions as approved by the commission.

Investors will have to buy or sell shares worth at least Tk 2 lakh per trade, according to Rahman.

If the paid-up capital of the company listed on the small-cap board crosses Tk 30 crore, it will have to apply to be listed on the main board. Prof Abul Hashem, chairman of the DSE, also spoke.