Is the rot beyond repair?

Should the government have any role in the 'supply' of shares to the stock market?
A Dhaka University teacher feels it should have. The teacher, according to a report published in the Financial Express last Monday, while taking part in a discussion between Finance Minister AMA Muhith and economists and think-tanks in Dhaka on the upcoming budget, requested the government to cut the supply of shares and securities in view of the current moribund state of the stock market.
The suggestion has come in contrast to the demand that the so-called market pundits used to make almost daily during the days of unusual rally of the market in 2010.
"Ensure the supply more stocks to the market without any further delay", was the demand that came from the stock market honchos and so-called experts. They thought that beefing up the number of stocks would be the most effective way of cooling off an over-heated market.
The government cannot dictate private companies to offload their shares for public subscription. It depends on the sweet will of the owners of the companies. A few leaders of the bourses then, however, even went to the extent of urging the government to force large local private and multinational companies to offload their shares for public subscription.
The government, apparently, being aware of its limitations did not pay heed to such an unlawful request. However, it had made certain moves to get the shares of a few state-owned enterprises (SoEs) offloaded in the stock market. But for reasons of resistance coming from within, the move had fallen through.
The market situation was as such at that time that the arrival of new shares even in bulk volume would not have any effect on a crazy market. The so-called investors would have devoured all the shares in no time making themselves even more vulnerable to future losses.
No matter what the Dhaka University teacher has suggested, the government has restrained itself from offloading the shares of the SoEs that are on its list of divestment since the time is not right for making such a move.
There is no denying that so-called investors, for quite sometime, have been more interested to get a few shares floated by companies through their initial public offerings (IPOs). But the investors have been showing their total apathy towards secondary shares.  The DU teacher's suggestion, apparently, has come in the context of the investors' illogical appetite for IPO shares. But the government can hardly do anything about it.
The organization which actually can be of any help in this respect is the securities regulator--- the Bangladesh Securities and Exchange Commission (BSEC). It does need look into the reasons for the newly listed shares being traded at unusually high prices when there are not many takers of old issues with their proven good track record.
Since the collapse of the market in December 2010 new issues, numbering between 70 and 80, have hit the market until now. Under the prevailing market conditions, sponsors are supposed to defer their plan to come to the primary market. But the situation in Bangladesh market is the opposite. Being largely inspired by the investors' response to IPOs, a section of sponsors are in a rat race to float the IPOs.  
However, allegations are there that the securities regulator, in some cases, does not exercise the required level of caution while approving the IPOs or going through the financials submitted by the companies willing to float primary shares for public subscription. Media reports have already pointed out the mismatch between the financial performance shown in the IPOs and that during the post-listing periods.
It is assumed that even in a dull and drab market, a section of small-time manipulators is at work. The securities regulator might have decided to ignore the foul play, if there is any. But the fact remains the mischief mongers have been causing a long-term damage to the market.
The current market situation, to be honest, is abnormal, in terms of investors' response. The dividends that many companies have been declaring annually are far more attractive than the return the banks and the government's savings tools are offering to the depositors and savers. Yet the investors are least interested in putting their money on stocks. The 2010 collapse has caused an extensive and long-term damage to the Bangladesh capital market. None knows for sure when there will be a reasonable level of recovery of the market.
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