Finance minister stresses stricter capital market monitoring

Finance Minister AHM Mustafa Kamal has called for stricter monitoring of the country's capital market. 

Given the ongoing bearish market trend, the finance minister on Monday attended a special meeting with all capital market stakeholders, along with central bank officials, insurance regulators, tax authority, and representatives of the Bangladesh Securities and Exchange Commission (BSEC).

Representatives of market intermediaries including stockbrokers, investment bankers, and asset managers also spoke in the meeting.  

"We had a detailed discussion on the existing problems in the capital market. If we address all those, we should see a strong and stable market in the upcoming days," said the minister while briefing reporters after the meeting at the National Economic Council conference room. 

Mustafa Kamal added that the economy of Bangladesh is doing very well, but unfortunately, the capital market is not. "The government is determined to fix all the discrepancies and address all anomalies."  

To cater to investors' demand for good companies, the government will ensure the listing of profitable public companies to the stock market, the minister elaborated. 

In addition to existing state-owned companies, new government ventures are also being instructed to list with the capital market. They just need some time to update their balance sheets, as a part of the preparation to enter the capital market, said Mustafa Kamal.

He also instructed securities regulator BSEC to form a special team to look into balance sheets of companies that are non-functional or suspicious in terms of both primary and secondary market activities.

"The Financial Regulatory Council has also been instructed to help the BSEC scrutinise issuers' finances," he said, adding: "Overpricing in both the primary and secondary market creates grounds for future price fall. That is why market regulators and policymakers will be cautious against this." 

Regulatory and policy unpredictability is hurting investors' confidence, as witnessed in the cases of Titas Gas and Grameenphone, maintained the participants of the meeting. 

Sheikh Kabir Hossain, chairman of country's only depository service provider Central Depository Bangladesh Limited, said that only injecting money cannot help prop the capital market up as more accountability is required for building and retaining investors' confidence.

Kabir also suggested ensuring accountability of auditors, issue managers, and all other signatory entities if anomalies take place during securities issuance. 

Dr ABM Mirza Azizul Islam, finance advisor to the former caretaker government, has linked the ongoing market selloffs with money market situation and an ailing banking sector. Although being skeptic of the money market condition, Bangladesh Bank Governor Fazle Kabir assured supporting the capital market if needed.

The former caretaker government advisor also called for good governance in all areas which is "key to investors' confidence," while Mustafa Kamal assured of a market environment where investors' rational expectation for profit will not be hurt. 

"The BSEC must treat all participants equally and anyone committing securities-related crimes must be punished, no matter how powerful they are," said the minister. 

In the same vein, Mirza Azizul Islam, also former BSEC chairman, focused on good Initial Public offerings (IPO), free from manipulation.

Witnessing unpredictable cases like Titas Gas' wheeling charge reduction a few years back,  the foreign investors are lowering their position in the local bourses, Arif Khan, a renowned local finance professional and a former commissioner at the BSEC pointed out.  

The ongoing tussle between Grameenphone and Bangladesh Telecommunication Regulatory Commission is also a sign of increasing regulatory risk, Arif maintained.

However, National Board of Revenue (NBR) Chairman Md Mosharraf Hossain Bhuiyan said there are scopes of mediation in case of any dispute, adding that the NBR is open to give the capital market investors and issuers further tax incentives if required.