Suggestions not to panic on negative equity adjustment
Merchant bankers demanded that the government increase policy support for listing big companies
The securities regulator has advised market people not to go for panic selling over negative equity as investors fear that its adjustment might intensify a selling pressure in the market.
The Bangladesh Securities and Exchange Commission (BSEC) came up with the suggestion at a meeting with the Bangladesh Merchant Bankers Association (BMBA).
In the meeting, which discussed bringing in good companies for the stability of the capital market, the BSEC suggested merchant bankers be vigilant so that no quarter could make undue benefits by spreading misinformation.
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Merchant bankers demanded that the government increase policy support for listing big companies. Besides, they highlighted the problems they face in bringing in good companies.
BMBA representatives and commission officials were present at the meeting at the Agargaon commission office on Tuesday with BSEC Commissioner Sheikh Shamsuddin Ahmed in the chair.
It is to be noted that two days after the start of the Russia-Ukraine war, the capital market fell sharply. In addition to the slump in the price index, the transactions also plummeted.
However, even though the fall of the index stopped on Monday and Tuesday, the transactions did not improve by much. In this situation, the commission sat in a meeting with the BMBA representatives.
The commission advised merchant bankers not to panic, although it is believed that the market nosedived under the impact of the Russia-Ukraine conflict and a consequent selloff.
Considering the coronavirus situation, the authorities have extended the deadline for the adjustment of negative equity in the capital market till December 2023.
Sayadur Rahman, president of the merchant bankers association, told TBS, "There has been panic in the market recently over the negative equity and we had a general discussion on how to reduce it."
Meanwhile, BSEC Commissioner Shaikh Shamsuddin Ahmed said at a workshop on Monday that there was no reason to panic about negative equity issues. There is still more time to adjust it. If need be, time will be extended further.
In this context, he said, the latest circular in 2020 gave a waiver on provisioning against the negative equity until 31 December 2022.
"The commission has extended the time till 2023 through a notification. After that, the commission did not make any decision. Spreading fear over this old issue is not acceptable at all," added the commissioner.
