Md Atiqur Rahman
The government is yet to take any steps to implement the key decisions taken on January 23 to boost share market investors' confidence following the market crash in the preceding week.
Analysts said the lack of government initiative to implement the major decisions, including reinvestment by banks the profits they had made from the equities market, had depleted investors' confidence even further leading to the current bear run.
After the general indices of Dhaka and Chittagong bourses had lost 600 and 795 points respectively in just five minutes of trading on January 20, finance minister Abul Maal Abdul Muhith, following a series of meetings with stakeholders, took the decisions.
The few decisions implemented so far include resumption of trading on the bourses on January 25 after a two-day suspension, withdrawal of circuit breaker on general index, reducing the range of circuit breaker on share prices, and formation of a committee to probe into the market debacle.
But the major decisions like reinvestment of profits made by banks from the capital market, steps to amend the Banking Companies Act to allow more investment by banks in the capital market, the central bank adopting a flexible attitude towards financial institutions for investing in the share market, holding regular meetings between the Bangladesh Bank and Securities and Exchange Commission officials, suspension of initial public offerings of two companies under the book-building method, and including BB representative in the SEC advisory committee, are yet to be implemented.
Moreover, the SEC has already allowed Mobil Jamuna and MI Cement to hold draw for allocation of primary shares through the book-building method.
'The decisions taken by the finance minister seem to be mere claptraps as all the banks and financial institutions are still inactive in the market, which is facing a severe liquidity crisis,' said Khairul Anam, a general investor.
A stock analyst said, although the finance ministry decided that the BB would take a flexible stance on the issue of financial institutions investing in the capital market, the central bank in its monetary policy announced on January 30 discouraged banks' investment in the 'unproductive sector'.
'The main reason for the current capital market crash in which the DSE general index has lost 1,200 points in six days is liquidity crisis as the institutional investors like banks have remained inactive,' he said.
BB officials said, instead of listening to the central bank's comments, the banks were assessing their own risks in investing in the market.
Regarding the banks' reinvestment of profit in the capital market, a senior official said the central bank had already asked banks to separate their profits made from the capital market.
'We will know how much profits the banks had made from the capital market after they prepare their balance sheets in March-April,' he said, adding, 'Then we will know how much the banks should invest in the capital market. So, the banks might not be able to reinvest their profits made from the capital market before April.'
Source: New Age
