The new monetary policy that set a lower private sector credit growth target will increase the volume of surplus liquidity in the banking sector which might go to the capital market giving it a significant boost.
“There’re no major changes in the new monetary policy. But surplus liquidity in the banking sector will increase and capital market will be the easier alternative to get that money as investment,” Dhaka Stock Exchange (DSE) President Ahasanul Islam Titu told UNB on Saturday.
He said the surplus money may go to other sectors like purchasing land but the capital market is the easier option.
The DSE chief also thinks that the bank interest will also drop due to low demand. “So, automatically investment in the capital market will get a boost.”
About the private sector credit growth, which has been dull in recent months, the central bank has set the target of 15.5 percent for December 2013 and 16.5 percent for June 2014.
The central bank set 18.3 percent as private sector credit growth target for the second half of fiscal 2012-13; as per the latest data which as of May 2013 stood at 11.43 percent.
The DSE President said political stability and a violence-free environment is very essential for keeping the market stable. “So, there shouldn’t be any political violence.”
He said if there is no violent activity people will get back confidence as a non-violent political atmosphere is crucial for the capital market.
Ahasanul Islam said the market has been performing well but there was adverse impact on the market after the almost weeklong hartals and political violence.
The market was not that much affected during the hartal period because there was support from the ICB (Investment Corporation of Bangladesh). “When the support had been withdrawn after the hartals, the market witnessed a fall.”
Responding to a question, the DSE chief said it is a lucrative time for buying shares but people are in fear. “Many of the share prices are now below expectation. So, it’s a good time buy shares. Confidence is very crucial.”
Meanwhile, Dhaka Stock Exchange will submit a demutualisation scheme to Bangladesh Securities and Exchange Commission (BSEC) on July 29 for regulatory approval.
The Demutualisation Act passed in April is aimed at separating the bourses’ management from ownership with a promise to bring transparency to the stockmarket.
According to the law, the DSE is scheduled to submit a demutualisation scheme to the stock market regulator within 90 days of the gazette notification of the act. The BSEC will approve it within the next 60 days.
Source: UNBConnect
