2014: A challenging year for stock market

Outlook of the new-year for the investors is a positive one, riding on the back of the newly build confidence from the demutualisation along with BSEC (Bangladesh Security Exchange Commission) promotion to A-category membership of International Organisation of Securities Commissions (IOSCO) from B-category last month, said Ahmed Rashid Lali, DSE director, while answering the following questions during an interview with Ibrahim Hossain Ovi of the Dhaka Tribune.

How about the overall market performance in the concluded year 2013?

First of all, I would like to mention here there were lots of achievements in the last year, among which, market stability could be considered as the number one success as investors were relieved to some extent, especially those who were hit had from the devastating market crash in the year 2010.

Secondly, the market players are now more confident than we have ever seen in the past couple of years and this was mainly because of the upgradation of BSEC to A-category membership of IOSCO.

The change in the category has upgraded the status of the bourses to an international level, which will also pave the way for attracting more foreign investors in the upcoming months as well.

Besides, we are going to get Advisory Regulation by this month, which would also be helpful for the investors to make worthy investment based on the meaningful fundamental analysis and advices from any of the advisory regulation body.

In addition to the changes occurred in BSEC status and demutualisation of DSE, we have already got the benefits from the surveillance software, which could also play even more effective role in bringing further discipline to the stock market.

Moreover, further precautionary steps were established to check stock price manipulation based on surveillance software output. If there was any gap in utilising the software at its utmost level, it is mainly because of lacking in skilled and trained manpower.  We have to address these problems seriously in the current year.

With maintaining the present stability, the market will march forward to a sustainable situation and growth as still we have lot of things to achieve for the stock market in the New Year.

What are the major challenges before DSE after demutualisation?

Establishing a skilful professional board for effective demutualisation is the key challenge for the DSC because the management won’t be able to run the stock exchange professionally and efficiently if there were no professional board in real sense.

Searching for strategic partners, offloading of shares, upgrading of existing technologies up to an international standard by 2014 are still the major challenges ahead, among others.

For your information, as per demutualisation scheme the DSE has to send a list of 14 candidates to BSEC for selecting seven out of the pool of the independent directors. And, among the independent directors, one will be finally selected as chairman.

If we failed to select a professional person for the position, would it bring any disaster for the stock market demutualisation?

Independent directors should obviously have sound ethical and a professional background. Failing to find such a person would certainly be a bad news for the stock market as a whole.

The chairman would need to spend time to discuss with the management over policy matters every demanding situation for actual implementation of the demutualisation.

Apart from that shareholder directors should also have enough knowledge about the existing rules and regulations, so that they can play a pro-active role in the policy making decision, as they are largely entitled to influence the independent directors.

Will demutualisation bring any benefit for the stock investors as a whole?

I should say, nothing in particular. But it will definitely boost up the confidence of the investors on stock markets as the demutualisation of the stock market will ensure more accountability and transparency in the whole process of the market.

What should be done to ensure manipulation-free stock market?

Both, the stock exchange and the regulator have to upgrade the existing surveillance software to international standard and this is a must.

Although there were criticism over the installation of new software at the beginning, but we have already got the due benefits out of it.

BSEC has brought Initial Public Offering issuers, brokers and investors under the scanning of the software and also ensured punishment against the offenders as per their offenses.

What should be done to make the IPO market vibrant?

Companies which intend to be enlisted must follow the due procedures; otherwise the authority won’t allow them to enter into the market as per rules.

In order to make the IPO market more vibrant, we have to encourage the good companies to be enlisted in the stock market, and such companies might also be attracted included in the stock market full filing their reasonable demand on the basis of the performance of the company concerned.

How the New Year would be for the DSC?

The New Year 2014 would be a challenging year for the DSE in the face of the ongoing political turmoil. The share market will definitely shine under the present system as soon as the political unrest is solved.

Political unrest is not only taking its heavy tolls on the share market, but also on the country’s overall economic activities.