Grilled BSEC for poor IPO quality

  • 91 companies listed on the capital market in the past 7-8 years
  • Half of their stock price has now halved
  • 98% of private investments come from banks, only 2% from the capital market
  • The tax gap between listed and unlisted companies should be widened to attract good companies

Restoring investors’ confidence in the capital market will not be possible, even with increased financial education, if good governance is not ensured, Dhaka Stock Exchange (DSE) chairman Yunusur Rahman said during a meeting. a round table on Saturday.

Over the past seven to eight years, 91 companies have been listed on the capital market. But most of them failed to meet their shareholders’ expectations, ultimately causing them to suffer, the DSE Chairman, also a former finance secretary, noted at the event titled “Current Scenario and Prospects for the capitals of Bangladesh” held in a city hall.

The Capital Market Journalists Forum and the Bangladesh Merchant Bankers Association (BMBA) jointly organized this program.

Farooq Ahmed Siddiqui, former chairman of the Bangladesh Securities and Exchange Commission (BSEC), said that over the past 10 years only a few good companies have come to the capital market as most of them get loans long term with the banks when they need money. .

Explaining the situation, he pointed out that 98% of private sector investment comes from banks, while capital market participation is only 2%.

“It’s a serious problem with the capital market. It won’t get better without good companies,” he also said.

Responding to criticism in the capital market, BSEC Chairman Prof. Shibli Rubaiyat-ul Islam said, “We should also think about who we are comparing the market to while criticizing it.”

“Don’t India and the United States have junk stocks? he asked, asking to be informed of the number of businesses closing each day in the two countries.

Speaking on stock market manipulation, the BSEC chairman said it takes six months to a year to identify a stock market player in the existing system.

“We can act when the stock exchange quickly gives the investigation report. It usually takes six months to a year to review the evidence and punish the culprit,” he continued.

Shibli Rubayet-Ul Islam said various steps have been taken to establish good governance. Action has also been taken against those involved in the manipulation based on investigations.

They have also taken initiatives to attract good companies to the market, he added.

Former BSEC Chairman Dr. M Khairul Hossain says 40% of India’s IPO shares are below face value, while they will not exceed 10% in Bangladesh.

He believes. “The number of non-compliant companies in Bangladesh is lower than any country in the world.”

The chairman of BSEC said, “Asking someone to invest in the capital market is not my job. Also, I’m not supposed to organize overseas tours, but I do in the national interest.”

“We are getting good feedback from the tours. We have held tours in divisional cities across the country, in the future we will do it at the district level as well.”

Capital market analyst Professor Abu Ahmed has suggested further increasing the tax gap between listed and unlisted companies to attract good companies to the capital market.

Previously, the tax gap between listed and unlisted companies was 10%, but in the current budget it has been reduced to 7.5%.

Speaking of this, he said that if the tax gap widens, good multinational corporations will come to the capital market.

Contrary to him, former BSEC chairman Farooq Ahmed Siddiqui said that even if the difference in tax rates between listed and unlisted companies is widened, companies will not come to the market because they get very easily long-term loans from banks.

Delivering a keynote address to the program, Md Moniruzzaman, Vice President of the Bangladesh Merchant Bankers Association, said that despite many ups and downs, there is a long-term growth trajectory.

He said there are many opportunities to increase the number of investors in the capital market in the future as FDR accounts in the country now stand at 48.7 lakh and there are shares in BO accounts of 14 lakh.

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