The proposed budget does have some provisions to help the struggling capital market of the country, such as the opportunity to invest undisclosed money and ways to reduce the cost of secondary trading of bonds.
But now, the adequacy and effectiveness of the fiscal measures have appeared as the vital question for the market and its stakeholders.
They are also discussing the important proposals that remain unaddressed.
Finance Minister AHM Mustafa Kamal in a post-budget press conference on Friday said that the government has given a lot to the stock market and it needs to be scrutinised why none of the efforts worked.
In the budget for the 2020-21 fiscal year, the government has declared a much-expected policy to channel undisclosed money into the mainstream economy.
Any individual can show their undisclosed wealth in income tax returns if they only pay a 10 percent tax. The wealth can be invested in listed securities, real estate, savings certificates or deposited into bank accounts. Cash in hand will also do.
The opportunity had been there earlier, but only in limited sectors like real estate.
Stock exchanges and prominent market personalities, like Dhaka Stock Exchange (DSE) Director Rakibur Rahman, welcomed the government move as it will help the economy and the market with increased flow of funds – in line with expectations of the government.
"The wide range of asset classes allowed to attract undisclosed money seems to have pushed the capital market in competition with other asset classes, including cash hoarding. We are cautiously optimistic, not overwhelmed like the public reactions from common faces," said a senior strategist at a top brokerage firm, preferring anonymity.
"The scenario is unlikely that wealthy people will rush to the stock market anytime soon, there must be investment cases and confidence on the market," he said.
He was optimistic that in the coming days, the bond market is going to see the end of its wait for vibrancy.
In line with the recommendations of a tripartite committee aimed at bringing life to the secondary market for bonds, the government rightly addressed the cost of secondary trading.
The finance bill proposed a feasible brokerage tax system in case of secondary market trading of securities other than shares and mutual funds; 10 percent of whatever a broker charges its clients instead of a flat 0.05 percent on value of the big ticket and low-gain securities.
However, repeated pleas from bourses and market intermediaries to reduce the tax burden on trading activities in the depressed capital market have gone unaddressed.
Analysts are putting green tick marks beside various fiscal measures that will help a range of industries to breathe.
The reduction of corporate tax for non-listed companies – other than financial institutions, telecom and tobacco – by 2.5 percentage points will also help business with an improved bottom-line. But the agony is that this is only applicable for non-listed companies.
The worst part of the corporate tax measures announced in the budget is the reduced gap between corporate tax for listed and non-listed companies.
The market has long been stressing to widen the gap for attracting well-performing businesses to get listed in the capital market, but the government has decided to go in the opposite direction.
At the time of writing this report on Friday evening, investment banking leaders were in an online meeting among themselves to finalise their budget reaction.
One of them told The Business Standard that the budget ignored a large number of important proposals from the market groups, but the reduction of corporate tax gap will further add to the problem of profitable businesses staying away from the capital market.
"The government had received some significant proposals from securities regulators to help the capital market this year, but I am frustrated to see none of those addressed in the budget," he said.
The Bangladesh Securities and Exchange Commission (BSEC) had requested the government to reduce capital gains tax for institutional investors to help the market turn its base to institutions instead of unsophisticated retail investors.
BSEC had also written to the finance minister for an incentive for corporations preferring bonds to bank loans as the bank-base financing of long-term projects is creating a serious problem for the financial system and the economy.
However, the ministry ignored both significant proposals from the capital market regulator.
"The two could have been game changers," said the investment banker, seeking anonymity as his opinions have not been formally vetted by members of Bangladesh Merchant Bankers Association.
"Widening the institutional investment base and building a bond market – both are crying needs for our capital market," he said.