Packages of dos for bourse dev: Bets for big-budget institutional investors stressed

Stakeholders Wednesday stressed big-budget institutional investment for progress of the country's capital market, as PM’s adviser Salman F. Rahman said retail ones reigned on the bourses.

"Our market is dominated by retail investors, there is a severe lack of institutional investors…," said Mr. Rahman while speaking as chief guest at a seminar organised by the Bangladesh Association of Publicly Listed Companies (BAPLC) virtually.

The BAPLC organised the seminar, titled Investors Resilience: Challenges and Opportunities in Alignment with Bangladesh Securities and Exchange Commission (BSEC)', to mark the World Investor Week-2022 declared by the Madrid-based IOSCO (International Organization of Securities Commissions).

The World Investor Week is a global campaign being carried out under the aegis of IOSCO from October 10 to 16, 2022 to raise awareness about the importance of investor education and protection in stocks trade.

Chairman of the Bangladesh Securities and Exchange Commission (BSEC) Prof Shibli Rubayat-Ul-Islam and former President of BAPLC Azam J. Chowdhury joined the function as special guests.

Vice President of the BAPLC Syed Nasim Manzur was the moderator of the seminar.

The Prime Minister's Adviser, Mr Rahman, said there is everything for the progress of the capital market, but yet to little avail. "We have everything but the market is not progressing."

There is expected number of merchant banks, stockbrokers, mutual funds and even market makers.

He elaborated on how bank management works under professional people.

"We on the banks' board just prepare policy for the banks, the management or the professionals do everything for the smooth operations of the banking institutions, some do better, some worse, but all make money," says the adviser, also a business magnate.

He notes that the institutions which invest in the capital market have been lacking in such professionals. "Why are there no such professionals in institutional investments?"

He laments: "We have everything on paper-we should now go into deeper why the market (not progressing)."

On IPO floating, Mr. Rahman told the meet that many reputed companies, including one from the pharma sector, are floating shares on the market on grounds of lacking proper valuation.

"I know a good pharma company is not coming as it believes that it remained undervalued under the existing valuation system."

He points out that companies need to announce dividends each year as they are dividend-driven ones otherwise they are penalized by the regulator.

He also notes that companies in many cases do not give dividends to the sponsors for further investment.

On banks' long-term investment, Mr Rahman said long-term investment by the banks is totally mismatched. "We are giving 7-8-12- year-long term loans from banks, which is totally mismatched."

Chairman of the BSEC Prof Shibli Rubayat-Ul-Islam told the business meet that market lacks trained and properly educated people. "I know many CFOs [chief financial officers] who are not literate on the capital market."

Professor Islam urged the listed companies to educate their people for the betterment of the market.

He said none comes to the regulator with innovative product developments.

The chief of the capital-market regulator, however, said Bangladesh Institute of Capital Market (BICM) has introduced a master's-degree programme for the market people.

Asif Ibrahim, chairman of Chittagong Stock Exchange, stressed financial literacy for the market development.

He also stressed the need for product development and incentivizing promising companies to float shares.

Arif Khan, vice chairman, Shanta Asset Management, said Bangladesh's market remained less impacted although many big makets were impacted amid the war in Ukraine and other turmoil in the global financial markets.

Mr Khan also said Bangladesh's market is highly dominated by retail investors who lack adequate knowledge and expertise on the market.

"It is around 85 to 90 per cent retail investors."

He said even in India investors visit professionals for investment.

The keynote paper presented by Mominul Islam, managing director and CEO of IPDC Finance, said there is a need for encouragement for long-term investment with bets fiscal benefits.

He suggested mandatory publication of portfolio performance at different time horizons by merchant banks and asset-management companies.

"Avoid regulator changes," Mr. Islam went on saying how to make a change for the better.

The seminar was chaired by president of BAPLC M. Anis Ud Dowla.

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