The country’s capital market has been experiencing a continuous decline, causing investors to lose capital every day. This prolonged downward trend has created severe distrust in the market. Adding to the concern is the renewed issue surrounding Bangladesh Export Import Company Limited (Beximco).
Despite the floor price or minimum price limit still being in place for Beximco shares, rumors have emerged that the floor may be withdrawn. As a result, although the index moved upward at the beginning of trading yesterday (Tuesday), the day ultimately ended in decline.
According to sources, in a letter signed by Faisal Islam, Assistant Director of the BSEC, on December 22, the Dhaka Stock Exchange (DSE) was asked to provide an update on Beximco’s latest status. The following day, December 23, another letter signed by DSE AGM Rabiul Islam was sent to all DSE stakeholders. That letter requested detailed information on eight issues, including the amount of Beximco shares held in each institution’s own portfolio and clients’ portfolios, margin accounts, purchase price, market price, and related data.
This letter triggered renewed panic among investors. Many believe that the regulator is collecting this information as part of preparations to withdraw the floor price on Beximco shares. Once such rumors spread in the market, the capital market turned downward. By the end of the day, the DSEX index fell by 13 points to stand at 4,860.
It is known that to prevent continuous declines in the capital market, the regulatory authority Bangladesh Securities and Exchange Commission (BSEC) imposed “floor prices,” or minimum share price limits, in several phases starting in 2020. However, this mechanism of artificially supporting the market faced widespread criticism from the outset.
In 2024, BSEC gradually withdrew floor prices from almost all listed companies. Most recently, at the BSEC’s 916th emergency commission meeting held on August 28, 2024, floor prices were withdrawn from four companies. As a result, only two companies remained with floor prices: Bangladesh Export Import Company Limited (Beximco) and Islami Bank Bangladesh Limited.
It is noteworthy that Salman F Rahman, private sector and investment adviser to former autocratic prime minister Sheikh Hasina, is the chairman of the Beximco Group. On the other hand, Islami Bank is owned by the Chattogram-based industrial conglomerate S Alam Group, which took control of the bank in 2017 through a controversial process.
On August 18, 2024, Khondaker Rashed Maqsood assumed office as chairman of the BSEC. Since taking charge, a series of controversial decisions have increased instability in the capital market. Appointments of directors at the DSE in violation of rules, the effective halt of IPO processes, show-cause notices against BSEC officials, and decisions to force officials into mandatory retirement have severely damaged investor confidence. As a result, the capital market has continued to decline.
Within the very regulatory body meant to ensure market stability, internal conflict began to surface. BSEC officials and employees became angered by what they viewed as reckless decisions by the commission. In protest, they observed a work stoppage on March 5, demanding the resignation of the chairman and commissioners. The following day, March 6, the chairman’s gunman, Ashiqur Rahman, filed cases against 16 officials.
Since then, the BSEC has effectively been in a state of paralysis. Amid this situation, at a commission meeting held on April 29, 22 officials were temporarily suspended and two others were issued show-cause notices. This has further intensified an atmosphere of fear and anxiety within the commission.
Market insiders believe that the situation created under the current leadership of the BSEC is in no way conducive to the stability of the capital market. To overcome the ongoing crisis, investors are strongly demanding the appointment of a capable, experienced, and widely acceptable individual to lead the regulatory authority.
