The Financial Express

Towards a stable, sustainable capital market

| Updated: December 28, 2020 22:08:20

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On Thursday last, the main index of the country's stock market soared to a 16-month high with a satisfactory level of turnover (Tk.14 billion). On the same day, the chief of the securities regulator did express his strong optimism about witnessing a stable and sustainable capital market within the next six months. The two events may be coincidental, but they are indicative of a change cherished by the investors as well as genuine entrepreneurs for a long time.

Ups and downs are quite a normal phenomenon. But certain factors were behind the rise of Thursday's market. The debut trading of the largest-ever initial public offering (IPO) of 'Robi', country's second-largest mobile telephone operator, was largely responsible for a notable rise of the market on the day. What was, however, important is the investors' response to the new issue. The trading of the Robi's shares had to be halted as their price had hit ceiling. As against the buy-orders for more than 180 million shares of the telco, a little over 0.1 million shares had changed hands.

Since the resumption of economic activities in the early part of June this year, the stock market has been showing a sign of stability. The market has gained more than 1600 points even though there were fluctuations. What one can hardly miss is the buoyant mood of the investors who are now preferring quality shares. Investors these days tend to go by the financials of the listed issues and price-sensitive information.

As the news broke about the vaccine development by Pfizer and Morderna in the US, the stock prices of two pharmaceutical giants soared. Identically, as the BeximcoPharma struck deal with the government to import Oxford-Astrazeneca vaccine from India, the company's share prices have risen noticeably. Such informed investment is a positive sign for the market.

Some other factors are also contributing to the upward trend in the stock market amidst pandemic-hit economic activities. The first stimulus package worth more than Taka one trillion, higher remittance inflow, some recovery in exports and the government's special attention to revamping the capital market have had a positive impact. Lately, the prime minister's directive to ministries to prepare the second stimulus package for various sectors has given an added impetus to the market.

More importantly, many people have been desperately looking for a viable investment option that would offer them a respectable amount of return. Very low-interest rates offered by banks on time deposits and limit set on investment in savings tools have made the situation rather difficult for people having surplus money. All the negative developments have always discouraged them from putting in their hard-earned funds in the stock market. But the incumbent top notches of the Bangladesh Securities Exchange Commission (BSEC) by their actions have been able to restore investors' faith in the market, at least, partially.

Yet a stock market is a place where manipulators do always remain on the prowl. There is no guarantee that they would not try to make their move at an opportune moment. But from the statement made by the BSEC chairman at an event in Dhaka Thursday, one has reasons to be assured that the regulatory body is adequately vigilant to thwart any foul play even by the big sharks.


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