Experts and academics at a discussion on Monday identified lack of integrity, inadequate knowledge and capacities of the key authorities as major causes for the present ailing state of the country's stock market.
They also stressed on the need for putting efficient and capable people in the top positions of securities regulator, merchant banks, Asset Management Companies (AMCs) and boards of the bourses to help salvage the market.
Former finance adviser of a caretaker government Dr AB Mirza Azizul Islam was the chief guest at the discussion, which was also addressed, among others, by Dr M. Shamsul Haque, vice chancellor of Northern University Bangladesh, Dr Mahmood Osman Imam, a professor of finance at the University of Dhaka, and Faruk Ahmed Siddiqi, former chairman of Bangladesh Securities and Exchange Commission (BSEC).
Other discussants include Alauddin A. Majid, chairman of BASIC Bank Ltd, former presidents of Dhaka Stock Exchange (DSE) Md. Shakil Rizvi, Md. Rakibur Rahman and Ahsanul Islam Titu, Ahmad Rashid Lali, a former DSE vice-president, Dr. Ahsan H. Mansur, executive director of Policy Research Institute (PRI), Ikteder Ahmed, former judge and academics, and senior officials from different brokerage firms.
Financial Excellence Limited (FinExcel) organised the focus group discussion (FGD) on "Bangladesh Capital Market: Challenges Ahead" in the city.
Mohammed Nasir Uddin Chowdhury, vice chairman of FinExcel and managing director of LankaBangla Securities Ltd, presented a key-note paper at the discussion.
"There is lack of professionalism at the merchant banks and AMCs," Mr Islam said.
Mr Majid said, "The legal provisions are not properly working in the market due to the authority's weak enforcement measures."
The capital market faced the situation under a ‘dishonest leadership’, Mr Majid claimed.
Mr Islam further said that there is conflict of interest at the BSEC as it promotes the companies to be listed in the bourses and simultaneously regulate them. "So, the BSEC needs to take its steps cautiously."
Echoing some other discussants, he also said that the companies should not be allowed to use its IPO proceeds to repay loan instead of expanding business.
Regarding the banks' exposure limit to the market, Mr Islam said that there should have a specific list of banks' elements that will be counted in the exposure to the market.
In this connection, Mr Rizvi and Mr Titu opined that the banks' exposure to the capital market needs to be brought to zero level but gradually.
"I cannot understand how the banks can deal with its investment in the stock market by the fund, which is taken from the people as deposits at a certain interest rate," Mr Titu said.
He opined for increasing the 'real institutional investors' like pension fund and provident fund by gradually eliminating the banks' exposure to make the market stable.
Mr Titu also questioned about the quality and expertise of the owners of the AMCs.
He also laid stress on increasing capacity of the merchant banks and brokerage firms, and keeping around 50 per cent shares of a company to the institutional investors to help maintain stability in the market.
Due to the rapid compliance requirement of the banks' exposure when the foreign investment is coming, Mr Rizvi said, "We need to realize that to whom we are handing our shares at low price?"
"However, instead of being apprehended, we need to enhance our market capacity by bringing more quality products to successfully face such challenge," added Mr Rizvi.
Mr Rahman underlined the need for ensuring higher efficiency and honesty of the merchant banks and other institutional investors to help them play their roles properly.
Disagreeing with the bailout programme initiative, Mr Lali said that the programme was not made properly. He also said that most of the AMCs were not given to the right hands.
He expressed his hope to have coordinated policy from the Bangladesh Bank (BB).
md.ali.d@gmail.com
