Good sense, as it seems to be the case now, has started dawning on the key management functionaries of the country's premier bourse, the Dhaka Stock Exchange (DSE), as far as its operations are concerned.
Briefing the media about the current stock market situation last week, Mr. Shakil Rizvi and Mr. Swapan Kumar Bala, member director and chief executive officer (CEO) respectively of the newly demutualised DSE, advised all concerned to change the perception about the role of the bourses. At the same time, they admitted the wrong approach that the DSE management had earlier taken towards the capital market.
Despite the fact that a bourse is basically a trading platform, the DSE in the past had focussed its all attention to up the market in line with the expectation of the investors, Mr Rizvi said while advising the investors to be more concerned about the performance of the listed companies than anything else.
There is no denying that the Bangladesh capital market is still young. During the first two decades following independence of the country in 1971, the economy had felt only its nominal presence. Things, however, started changing with the entry of quite a large number of private banks and insurance companies as well as establishment of a greater number of commercial and industrial entities in the private sector in the next two decades.
However, the number of listed entities is still low, if it is considered in the context of private companies that have all the potential of getting listed with the bourses. Owners of such potential establishments are, in most cases, unwilling to give up their control over the management.
Besides, the natural development of the market was seriously affected by the 1996 bubble-burst episode. The scam had greatly tarnished the image of the stock market. Many potential private companies decided against going public because the market had then been stigmatised by its collapse.
It took more than a decade for the market to make a turnaround which had appeared initially natural. But the crooks again exploited the 'upbeat' mood of mostly ignorant investors in an environment that was jointly created by an over-indulgent securities regulator and an otherwise hyperactive management of the country's main bourse, to fleece the simpletons.
"Previously our (DSE) concentration was focussed on how to facilitate the market to go up following the investors' demand. But it was wrong. The function of a stock exchange is to see whether trading is being done as per rules", Mr. Rizvi was quoted as saying in this paper last Friday.
It is a different issue whether the DSE member director or any of his fellow members of the exchange did earlier try to dissuade their largely over-zealous colleagues in the DSE from being a party or parties to the acts of manipulation or dancing to the tunes of the pied-pipers during the latest 'slaughter of the innocent' in 2010.
The CEO of the DSE told the media that there should be no reason for the investors to lose hearts since the market is 'going on its own way'.
There is no denying that market is now relatively stable. But it has developed a notable trend almost similar to that of the proverbial money scaling oily bamboo. The general index of the DSE has been moving up and down within about 500 points for some months. Barring occasional fluctuations, if the index moves up 300 points within a period of two weeks, the same would go down to the level from where it had started in next two weeks. To many, the price movements might appear as being 'dictated' from somewhere. The DSE personnel and the securities regulator will, in all probability, instantly dismiss any such fear. Yet things are, apparently, far from perfect in the stock market. That is the gut-feeling of many sceptics.
Hopefully, having in place the demutualised structure in the bourses and considering the latest move to acquire the latest software for efficient and flawless trading, the scope for manipulative transactions will now be far less than before. The new DSE leaders have asked the investors to be watchful about the performance of the listed companies. But the government does have an important role in ensuring an environment congenial to normal and profitable operation of all companies, listed or otherwise.
Then again, it has to be ensured that the financials of the companies do contain right information about profit and loss. There, as many analysts do strongly feel, exists still lack of transparency in the financial statements, published from time to time, by a section of unscrupulous listed companies to cheat either the investors or the taxmen. It remains the responsibility of the authorities concerned to find ways to stop this evil practice.
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