2024-07-03 15:04:49
Bangladesh’s capital market has been in recession for a long time. As a result, investors have to go through more bad times than good days. Apart from domestic investors, foreign investors are also turning away from the capital market. Capital market has become so unstable due to unstable policy making.
M Talukder, Managing Director of Decision Maker Limited and Executive Director of Smart Shares and Securities Limited, said these things while talking to RisingBD about what are the obstacles in the development of the capital market and what is the way out of it. The topics discussed with him are brought to the attention of the readers.
RisingBD: What do you think about the current situation in the capital market?
M Talukdar: Look, the stock market of Bangladesh has been in recession for a long time. There are many problems behind the current state of the market. The first problem that strikes me is the frequent policy changes. Then there is the attempt to manipulate the market by clapping hands without solving the previous problems. Market fluctuations are a normal process. But, when the market corrected in our country in 2020, the index came down to about 3500 points. Then he was not allowed to complete the correction. On the other hand, an artificial floor was introduced with investors in mind, which has remained in the market ever since. So if the market cannot be brought out from these artificial issues, the market will never be good in the long run. Floor has really been able to give something good to the market? not at all Because, from the floor price given in 2020, about 121 shares are currently below that floor price. But four years have passed since then.
RisingBD: Capital market policies are frequently changed keeping investors in mind. Do you think, market development is possible through policy changes?
M Talukdar: Our regulatory bodies change policies at short notice. As a result, doubts arise in the minds of investors. Investors panic. For example: You will invest money in a place where you don’t know how the regulations of that place will sustain. Will you invest heavily in unstable policies or will anyone do it? won’t do After a day or two, the floor is given and taken away again. Again the minimum limit of the share price is 2 percent, 10 percent and again 3 percent—they are going on one after the other. In my opinion, the current stock market is so unstable because of unstable policy making.
RisingBD: Although the index in the neighboring country India is currently on the upswing, the recession in Bangladesh’s capital market is not over. What do you think is the difference between the capital market of Bangladesh and the capital market of other countries?
M Talukdar: Among all the stock markets in the world, the capital market of Bangladesh is rare. The market policy that you have to read and memorize daily, weekly and monthly. Can anyone tell how many rules there are in Bangladesh’s capital market? For example: 10 to 12 shares are still on the floor. Who owns many big faces. Many unpronounceable people whose company shares are still on the floor. And other shares cannot fall below 3 percent, but can increase by 10 percent. The block market cannot be traded below 3 percent. You will not find such a strange policy in another market in the world. These are the biggest differences between the Bangladeshi capital market and the global capital market at present.
RisingBD: Will the market be better if we fill the gaps in the capital market?
M Talukdar: To be honest, the biggest thing the market lacks is accountability. Those who have the power here are taking advantage of it. The above-mentioned factors are not only responsible for the current state of the capital market, but are only a few of the many factors. And if there is a reason, then there is the change in policy regarding purchase price and market price, which was also a big mistake. This is also a big reason to mention behind this state of the market today. Due to this, the purchasing power of the bank has decreased a lot. We are doing local market policy after coming out of international market. Then the law is not working equally for all. Eg: Lately some companies are suddenly being sent to Z category. Again many companies are not being sent to Z category despite being guilty of the same offence. So it can be understood that the law is not working equally for everyone. Bangladesh Securities and Exchange Commission (BSEC) Chairman Professor Shibli Rubaiyat-ul Islam is a good and prudent person. But, I think, there is a problem with those who are giving him advice. They are deliberately making him worse.
RisingBD: What are the major obstacles to bringing good investors to the capital market and how to solve them?
M Talukdar: The biggest obstacle here is frequent policy changes and internal illegal involvement. A level playing field should be created to attract good investors here. If you do not provide a good field, good players will not come. For example, because the football fields of Bangladesh are not of good quality and the players cannot be paid well, good players do not come to Bangladesh. Similarly, foreign investment is not coming in the capital market, because we are not able to provide them with good conditions. Technical errors or problems occur in DSE after two days. If foreign investors see this, why will they come to invest in Bangladesh? A level playing field should be provided to attract good investors. It will never be possible to create a level playing field by changing policies overnight. Sometimes it is known through the newspaper that today BSEC has agreed to sell the company by phone. That big investor was giving the sale, blocked him. In fact, retail investors are very happy with such events. But, no one has any idea about its dire effects. In this, the index increases for one day but decreases again the next day. Suppose you have invested 100 crores in the market. You feel that the market will fall, but you realize that you cannot sell shares at will. Obstacles are coming when you want to sell. As a result, the burden of losses is being increased on the shoulders of large investors while saving retail investors. Big investors do not come to the market due to this fear. It is not the responsibility of private institutes or big investors to see whether the market goes up or down. They are coming to do business. The market index did not rise. They should be given full freedom. There cannot be any kind of hindrance in buying and selling. No interference can be done. Insider trading should be handled with firm hands. But, if you want to sell the shares according to the rules, there will be obstacles, which is not accepted by any big investor. Such events have had a major impact on the capital market of the country. Many big investors have withdrawn from the market. Despite the desire, many people are not coming, thinking that if they cannot do business independently.
RisingBD: This year’s national budget has been passed by keeping the capital gains tax in the capital market. How do you see this issue?
M Talukdar: The National Budget for the financial year 2024-25 was passed on Sunday (June 30) keeping capital gains tax in the capital market. The budget has introduced tiered taxation on capital gains above Rs 50 lakh. I applaud this. I think it will have a positive role for the capital market.
RisingBD: What can be done right now to restore confidence in the capital market?
M Talukdar: Ordinary investors have not been able to trade in the capital market for a long time. The place of trust between people must be fixed first. Regulators need to be bolder now. All types of garbage should be removed. For example: the price limit of shares cannot fall more than 3 percent in one day, this decision should be lifted. The market must be allowed to run at its own pace. Besides, the companies which are on the floor should be lifted. Naturally the market will go up and down. Whenever there is undue interference, its normal dynamics will be disrupted. So you have to be a little tough, no market correction in the world comes down to zero points. At some point it started growing again. If grown naturally it gives good results for a long time. Therefore, as a first step, I think it is important to quickly resolve the decision that has been taken that the price limit of shares cannot fall more than 3 percent in one day.