Capital market needs steps to rebound

Immediate steps are needed to rebound the capital market in order to win the hearts of investors, experts said.

They said the stock market witnessed bearish for several months as worried investors continued their selling spree, fearing further fall of shares prices.

Market analysts said in absence of quality securities, the capital market is still unable to play its due role in expanding economic activities, which is one of the strategic tools to achieve SDGs.

They informed most of the investors have been struggling for ongoing bearish market as depressed macroeconomic outlook, soaring non-performing loan and reducing foreign investment in the market pushed the situation to worsen.

Eminent economist and market expert Prof Abu Ahmed told The Bangladesh Post, Lack of quality stocks and liquidity crisis in the banking sector worsened the ongoing confidence crisis among investors, witnessing a continuous fall as most of the companies have failed to satisfy the investors with their earnings and dividends, he said. 

 As a result, most of the investors are selling their shares to flee the market, he continued. The government should immediately prepare the ground quite well to bring in some good companies, in order to undertake a drive to develop a long-term financing capital market, Ahmed added.

The eminent economist said, the government should encourage good companies, including local as well as multinational companies like Unilever, Nestle and Robi, to offer IPOs.

Ahmed mentioned that the government should make some rules and give incentives including reducing corporate tax for listed companies to encourage good companies to be listed in the stock market.

 The government should give cash supports to the market like easy lending from banks, for listing organisations and direct fund support in the market through ICB or Brokerage houses to help rebound the market, he added.

Former Advisor to a Caretaker Government AB Mirza Azizul Islam said, The government should encourage existing companies to list in the market by giving many fiscal initiatives which will rebuild investors' confidence to inject more funds into the market.

At first, the government should bring some public companies to motivate others companies to enlist in the capital market.  However, the stock market has been witnessing a downward trend in the last two years.  As a result, the investors are gradually losing confidence to inject new funds into the market.

The prime index of the Dhaka Stock Exchange (DSE) went down by more than 1771 points, or 28.44 percent, to settle at 4,456.83 points on Thursday from 6,228.65 points in 19 December, 2017.

Meanwhile, the blue chips index (DS30) slumped by 730.40 points or 32.55 percent to close at 1,513.47 points on Thursday from 2,243.87 points on December 19, 2018 and the DSE Shariah Index lost 372.92 points or 27.21 percent to close at 997 during the time.

The market capitalisation of DSE dropped to Tk 3,396 billion on Thursday, which was about 19.22 percent lower against Tk 4,204 billion on December 19, 2019.

On the other hand, the port city bourse, the Chittagong Stock Exchange (CSE) has also seen a negative trend since May 1, 2018 with its selective category index (CSCX) losing nearly 1,853.81 points to close at 8266.57 points on Thursday.  The CSE All Share Price Index (CASPI) also fell 3,198.46 points to settle at 13,531 during the time.