Analysts expressed the view that capital market should be left alone to revive on its own. Any intervention, whether from the government or the regulator, may give rise to hopes among the retail investors, but cannot ensure sustainability of the market, they said in a dialogue on State of the Capital Market and Recent Policy Initiatives organised by CPD at the BRAC Centre Inn on 12 December 2011. The speakers also said there should be coordination among the government, market regulator, central bank, stock exchanges and other stakeholders. Dr Debapriya Bhattacharya, Distinguished Fellow, CPD moderated the session while Dr Khondaker Golam Moazzem, Senior Research Fellow presented the keynote paper.
In the keynote paper titled Mistake, Malgovernance and Malfunctioning: Stabilising the Capital Market of Bangladesh Addressing the Structural, Institutional and Operational Issues, Dr Moazzem said, extreme malgovernance coupled with a number of failures to undertake proper initiatives made the market dysfunctional. He suggested a number of measures including establishing SEC’s role as the regulatory authority in the market, enforcing disciplinary measures against improper activities, strengthening SEC’s surveillance mechanism among others to ensure medium-term stability. As there were little to gain from short-term measures, he urged that the capital market problems needed to be measured beyond political stance. He said injection of funds should not be the measure to stabilise the market.
Dr Mirza Azizul Islam, Former Finance Advisor to the Caretaker Government opined that there is no need to give incentive to the capital market. Advising the government to implement the packages that were already given to the market, Mr Islam observed that the primary market can play a vital role in stabilising the market. Still the initial public offerings (IPOs) are being oversubscribed, indicating the investor’s interest in the primary market, he said. The secondary market is widely devalued right now due to exuberant pessimism and there are many securities where the investors can invest, he said. He called on the investors to not inject all their investable amounts in the market.
Mr Khondkar Ibrahim Khaled, Chairman of Bangladesh Krishi Bank drew attention to the fact that measures by policymakers suggest that they have identified liquidity crisis to be the main factor hindering the recovery of the capital market from recent turmoil. He strongly maintained that initiatives based on such wrong assumption will not be effective to bring any expected stabilising outcome. As the Head of the Probe Committee to investigate the capital market crash in 2011, he claimed that the SEC did not take any step according to the Probe Committee Report against some people.
CPD Trustee Board Member Mr M Syeduzzaman urged the SEC to revise the newly issued notification on sponsor’s share holding, as the paid up capital structure of the financial sector is different from the other sectors.
High officials from the major bourse of the country, high officials from banking and finance sector, academics, researchers, political leaders, former government officials were present in the dialogue.