The country's stock market since the FY 2010-11 collapse has been an 'off-again and on-again' phenomenon. There are certain underlying reasons behind it. M. Shaifur Rahman Mazumdar, managing director of the Chittagong Stock Exchange (CSE) in a recent interview with the FE pointed out a few. Excerpts follow:
Answer: Most of the CSE's TREC holders are not active and professional in their broking business. Gradually, this business is being shifted to the professional and institutional organisations. Post debacle (after 2010) regulatory structure and market control mechanism forced dual (having DSE and CSE TREC's) TREC Holders to maintain their business in DSE. This situation has made CSE's market as a illiquid market. Resultantly, investors are shifting their portfolio from a very few active single brokerage houses due to depth crisis in CSE market. The only solution of the problem is either introduce new and separate products or features for CSE or to enhance the number of market participants heavily. Second option is not supported by a group of shareholders since that would hurt their own interest. The first option is a matter of policy issue. We are trying to convince the authority to allow some new avenues for CSE. I hope after inclusion of strategic partner, sustainable business model for CSE will be possible to develop.
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M. Shaifur Rahman Mazumdar
Q 2. Many small investors have turned away from the capital market and it is alleged that a few of them committed suicide after the debacle of 2010-scam. What are the coordinated efforts that have been taken by the CSE to train investors in big programmes to bring them back to the market?
Ans: A good number of programmes are being conducted by exchanges and market intermediaries to increase awareness among the investors. Moreover, nationwide financial literacy programme is also going on to enhance consciousness among the investors.
Q 3. Country's two bourses are yet to become fully vibrant again due to the capital market scam of 2010. Is there any effective move of the regulatory body against those involved in the scam?
Ans: After the debacle of 2010 huge regulatory restructuring took place. Exchanges are passing the transition time in the implementation process of demutualisation. I am hopeful that after inclusion of strategic investor in CSE effective move would be possible to draw sustainable business process.
Q 4. BSEC Chairman Professor M Khairul Islam said there are ample opportunities to develop the capital market. What, according to you, are the probable steps to that end?
Ans: All the economic indicators of the country are showing positive signs. But the size of the capital market in terms of listed issues, market capitalisation, advanced products and features are not that significant. Size and growth of the economy indicates huge potentials and opportunities in the capital market. Regulators and exchanges are sufficiently conscious about it. Some new and advanced products are in the pipeline for implementation. To attain the benefits of capital market for the development of the economy, policy support and intervention from the government is also highly important.
Q 5. The DSE organises capital market fairs for extensive learning to raise awareness and boost up investors. Is the CSE lagging behind in this regard?
Ans: CSE is going to organise its 6th Capital Market Fair at the beginning of February 2018. We expect the programme will help significantly in development of the market.
Q 6. The CSE organised a meeting with leading entrepreneurs of Chittagong in the first week of August last. The issues discussed in the meeting were to find how the big business conglomerates can add value through listing themselves in the capital market. How are they responding?
The report is not significant as yet. We are trying to build a routine communication with the entrepreneurs. We have also a plan to organise an Entrepreneurs ' Conference in Chittagong.
Q 7. A few giant multinational companies are yet to list themselves in the bourses. Will you say a few wards, please?
Ans: Some initiatives have already been taken by Ministry of Finance. But the overall process is very slow. I think it is high level policy issue of the government.
Q 8. The share prices of a number of Z category companies that do not give dividends to the shareholders are high. Why does it happen?
Ans: It is a long outstanding problem of our market. We observe that sometimes small capital companies and some Z category companies are not moving rationally. I think if we can expand our market with sufficient quality scrips and depth the problem will be overcome gradually.