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Confidence in capital market growing

Published : 18 Jan 2021 09:46 PM | Updated : 20 Jan 2021 10:58 AM

The government’s strong measures have facilitated the country’s capital market turnaround in building confidence among the people to invest in it, experts say.

However, the experts suggested that the government give a permanent shape to the capital market in order to continue the positive trend so that people will be coming up with more investments in the sector.

After almost 50 years of independence, Bangladesh has not built a strong stock market as yet though the capital market strengthens a country’s economy, they added.

After continuing depreciation of stocks for several years, the government has taken massive measures to boost the capital market, which has helped the market to rebound strongly.

Most of the investors from all walks of life are returning to the capital market that faced crushing blows thrice in the period between 1996 and 2010 due to some unscrupulous traders and stakeholders, they mentioned.

Hence, the government should build the strong capital market for protecting investors’ investment, they added.

According to DSE sources, many investors were terrified about losing capital from January to July 2020 in the outgoing year, but the capital market started to turn around from last August. 

From December last year to January 14 this year, the capital market is in such a good position that it has not been in a better position in the last 10 years after the 2010 catastrophe.

In this regard, eminent economist and market expert Prof Abu Ahmed told Bangladesh Post, “People’s interest in the capital market has increased due to tightening investment in savings certificates and lower interest rates on bank deposits.” 

Investment in the capital market is increasing, especially as there are less opportunities for alternative investment, he said adding that investor confidence has begun to return after the new commission took charge, and its  various positive steps. 

“As part of its move, new investors are entering the market every day and BO accounts are increasing. As a result, transactions and market capitalization in the capital market are increasing,” he mentioned.

Abu Ahmed said many investors continued their buying spree amid growing confidence in the market riding on regulatory moves to restore discipline as well as some good IPO approvals recently including biggest-ever issue Robi.

The government should immediately bring in some good companies, in order to undertake a drive to develop a long-term financing capital market, Ahmed added.

The economist said the government should encourage good companies, including local as well as multinational companies like Nestle 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.

Shibli Rubayat-Ul-Islam, chairman of the Bangladesh Securities and Exchange Commission (BSEC), told the media the capital market is now more mature, no one will be able to manipulate the capital market.

“The BSEC is working to stop the manipulators. As a result, no one can play with the market like they did causing the 1996 and 2010 downfalls,” he mentioned. 

Rubayat said we are providing much information to investors so they can invest in the market carefully.

“If we felt anyone was manipulating the market, we take immediately necessary steps to stop any manipulation,” he mentioned.

Hence, the capital market is now more secure than that at any other time, he added.  

The Dhaka Stock Exchange (DSE) witnessed a rapid growth to set a landmark as the market-cap (capitalization) crossed Tk 5000 billion for the first time.

The market-cap on the DSE stood at Tk 5017 billion on the day.

Most of the investors witnessed buying in telecom, financial institution, food and allied, fuel and power, pharmaceuticals and chemicals and engineering sectors helping the benchmark index to cross 5,900 points mark since 30 January 2019.

The prime index of the Dhaka Stock Exchange (DSE) increased significantly by 1873 points to stand at 5,909.30 points on Thursday over that in the same period of the previous year.

The DSE 30 Index comprising blue chips went up by 1361 points to close at 2,236.77 and the DSE Shariah Index (DSES) increased by 393.53 points to finish at 1,323.50 during the time.

On the other hand, the port city bourse, the Chattogram Stock Exchange (CSE) also saw a rapid growth during the time with its selective category index (CSCX) gaining 2749 points to close at 10,387 points.

The All-Share Price Index (CASPI) of the CSE was higher by 4,620 points to close at 17,220 points.