Good governance, digitisation, earnings growth of listed companies and supportive macro-economy are the key to a sustainable stock market, analysts said yesterday.
Their comments came in a webinar — Towards a sustainable capital market: the drivers of growth — jointly organised by Bangladesh Merchant Bankers Association (BMBA) and Capital Market Journalists’ Forum (CMJF).
The stock market should be healthy and properly governed because only then people will come to the market, said Prof Shibli Rubayat Ul Islam, chairman of Bangladesh Securities and Exchange Commission (BSEC).
“Who will come with their hard-earned money in an ill market?”
“We are working on restoring good governance but we need stakeholders’ active participation to reach the goal,” he said at the event as the chief guest.
“To diversify products of the market and make the market debt-based rather than equity-based, we approved many bonds,” he said.
After taking over in May, the new commission led by Islam approved zero coupon bonds worth Tk 850 crore, subordinated bonds worth around Tk 3,500 crore and local bonds of Tk 100 crore.
The commission will allow stock brokers to open digital outlets abroad in order to attract non-resident Bangladeshis and foreign investors to the market, Islam said.
To ensure transparency, the BSEC is working to digitise every sphere of trading and activities of the stock market, he said.
Islam hoped the digitisation work will be completed within 2021.
“Now we are working to ensure good governance in the trading of junk stocks. After that we will take steps about the companies that are listed with the over-the-counter market.”
The commission is trying to give the money back to the people who invested in debentures long ago but did not get anything in return, he said. “We hope people will get the money back soon.”
Good governance and supportive macroeconomic environment are needed to achieve sustainable development of the stock market, said Md Moniruzzaman, managing director of IDLC Investments.
“A correction takes place when index or companies’ stocks rise past the earnings growth, which is evident from the stock market statistics of the last one decade.”
The market does not need so many non-performing stocks, rather it needs some well-performing dependable scripts, he said while presenting a paper in the meeting.
No well-known multinational company came to the market in the last one decade after the listing of Grameenphone, said Asif Ibrahim, president of Chattogram Stock Exchange.
“But we need to bring some good companies for the sake of a sustainable stock market.”
The BSEC, the BMBA and other intermediaries should work relentlessly to bring well-performing and the best-governed companies into the market, said Ibrahim, also a former president of Dhaka Chamber of Commerce and Industry.
Focus should be given on why good companies are not coming to the market, said Sayadur Rahman, president of BMBA.
“Lower tax benefits of being listed is the reason.”
The difference between listed and non-listed companies’ corporate tax has been brought down to 7.5 per cent this year from 10 per cent, he said.
“If we want to bring good companies to the market then tax benefits should be offered to them.”
The stock market should emphasise good governance, efficient manpower, product diversification and digitalisation, said Eunusur Rahman, chairman of the DSE.
“To get a sustainable stock market, we need good governance, good governance, and good governance.”
Hasan Imam, president of AMC Association; Sharif Anwar Hossain, president of the DSE Brokers’ Association, and Hasan Imam Rubel, president of the CMJF, also spoke at the event along with other top officials of leading stock brokers and merchant banks.