The government will place a bill in parliament during the current session to enact a law introducing share buyback system in an effort to “save” the investors in the falling market.
Finance Minister AMA Muhith Sunday said this Sunday in the House while describing various government measures to boost the share market in the wake of recent crash.
During the question hour session, a number of lawmakers voiced concern over the recent turmoil in the stock market causing sufferings to a huge number of small investors. They also enquired into the government moves to address the situation.
In response, the finance minister informed the House about the government’s ongoing and future measures including enactment of share buyback law to regain confidence of the small investors.
If the buyback law is passed, a company can buy back its own shares held by the public either to increase the share value or to eliminate threats by shareholders who may be looking for controlling stake.
Reasons for buybacks include putting unused cash to use, raising earnings per share, increasing internal control of the company, and obtaining stock for employee stock option plans or pension plans.
The Dhaka Stock Exchange (DSE), the country’s prime bourse, moved in early 2009 for introduction of buyback law but failed.
The finance minister also explained some reasons behind the recent unrest in the share market as he said many small investors invested in the market to gain within short time without any prior knowledge on the capital market. They believed they would get profit by investing in the share market, he said.
Besides, share prices of some companies were overpriced illogically, he said.
The minister said no-one sells their shares when the market is up, but they start selling shares in a panicky situation when the market witnesses a downtrend.
“And what can we do in this situation? We don’t find any reason behind their behaviour,” the minister added.
He said one lakh investors entered the share market after its fall for making profit by manipulating the market. “They should be punished,” he said.
The minister said the government is monitoring the situation in the capital market round the clock.
About the probe body investigating the share market crash, he said the committee may submit an interim report on their findings and the government will also publish it.
The finance minister expressed resentment at a supplementary question raised by independent lawmaker Fazlul Azim, who said the country’s economic situation is in a “bad state”.
“The country is suffering from power and gas crises. New industries are not getting power and gas connections. Prices of essentials are spiralling. Share market has collapsed. The overall economic situation is fragile. I want to know the government measures to improve the country’s economy amid all these,” Azim said in a supplementary question.
Azim in his scripted question wanted to know whether new branches of scheduled banks will be set up in Noakhali district.
In response, the finance minister sharply reacted to Azim’s statement about the economy.
“I will not reply to his question. The original question was on setting up branches of state-owned banks in his constituency. He always speaks thousands taking the opportunity during question-answer hour,” Muhith said.
“His tongue should be controlled. His statement should be expunged from parliament proceedings,” the finance minister said.
Speaker Abdul Hamid said an MP can ask any question to the minister. But he will have to submit notices in some cases in advance seeking answer to his questions.
Read the original story on The Daily Star
