As long as Awami League is in power, the stock market will not be good – this was the common public sentiment about the stock market before August 5. That is, if the government changes, the market will be better, that was the expectation of everyone. However, the index increased by 1000 points in just four working days after the fall of the Awami regime.
But the positive momentum of the market is somewhat hampered by the tension of appointing the Bsecs chairman. After a slight correction the index was trying to turn around again, but the new chairman’s drastic action turned the market upside down. As a result, the index fell by almost 600 points and returned to its previous level. Now the question is, will the market go down or turn around?.
The market is now very close to a double bottom, technically an ideal position for a bounce back. This has been reinforced by the news of a guarantee of 3 thousand crore rupees to ICB. But the question may come, is it possible to strengthen the market completely with this money? It should be remembered here that there is no need to give money to ICB or anyone to improve the market. For example, between August 6 and 9, the index jumped to a record high and traded over tk. 2,000 crore, with no one paying out of pocket, but the confidence of marketers.
That is, even if there is a permanent liquidity crisis in the market, there is no temporary liquidity crisis. Rather, money has now flowed into the hands of a class, many of whom do not have access to ready-made investments. However, the guarantee sends the message that the government is keen to develop the market, which will feed investment confidence.
Permanent solution to liquidity crisis.
Regular investment from public-private pension funds, welfare funds and other investable funds, which exist in many developed countries, should be legislated to deal with the persistent liquidity crisis. Current indicators and market representation.
As we know, the index does not accurately represent the entire market as 85 companies are currently excluded from the index. In particular, almost all stocks have fallen so much in the last 15 working days that many investors’ portfolios have lost 30-40% or more, while the index has fallen by little more than 10%. Investors have not faced such massive and massive losses in the recent past, as a result of which they have voiced their demand for the chairman’s resignation. I personally am not in favor of the chairman’s resignation, although some of the actions of the commission show immaturity. However, the commission is already trying to correct some mistakes, which is a positive aspect.
Unfinished important work admittedly, the capital market is not a place for adventure or revolution. Here strategic steps have to be taken. There is a lot of unfinished business in the market, which if implemented could quickly push the index above 7,000. For example, the founders of companies that do not hold 30% collectively and 2% individually, should be forced to increase it through negotiation. Similarly, the rules for increasing the holding of insurance company entrepreneurs also need to be strictly implemented.
Capital Market Reforms: Timeline and Implementation while 90 days have been set for constitutional reform, no specific time frame has been set for capital market reform. Perhaps because the scope of the work is extensive, it is difficult to set an exact time frame right now. However, the Committee should inform the Commission of the required time of commencement. Alternatively, rather than submitting a full report at once, BSEC could begin implementation by reporting on similar issues in a step-by-step manner on a priority basis.
Category system and its rationale the current category system based on “A”, “B”, and “Z” is in my opinion irrelevant and harmful. Category “A” and “B” both maturing T+2 and getting margin benefits subject to 40 PE, then keeping separate categories on the basis of rate of dividend is unnecessary. Maturity is three days in case of Z category, which is a small difference compared to the rest. Again, if the maturity period is increased as before, the increase in price due to short-supply cannot be reined in. It is better to abolish such category system. If categories are to be kept, separate categories for small, medium and large companies based on capitalization can be created and a common index with all companies and separate category indices can be introduced.
Recommendations on weak companies for companies that fail to pay dividends, do not hold AGMs or are closed, entrepreneurs, directors and management need to be punished or held accountable rather than punishing investors. However, in consultation with owners and investors, policies and rules should be formulated, which will increase their ability to pay dividends. Concessional loan facility to weak companies will have a positive impact not only on the capital market but also on the industry and commerce of the country. Such companies may also be given conditional tax exemptions. Bsec should do advocacy in this regard.
Anti-manipulation and the importance of large capital While there is a need to curb market manipulation, driving large caps out of the market will not prevent the index from falling. The price discovery and distribution process is not automated in most cases; It is effective only in the interest of large capital. Hence the importance of large capital and it is important to encourage them.
Method of calculation of index at present 85 companies are out of the index so the index is not accurately reflecting the market conditions. Hence index should be calculated by including all companies excluding volume based index methodology.
Decision on IPO in the current scenario most of the investors are against IPO but the main purpose and life of capital market.
This information is collected from social media .
