Muhith for bond mkt as investors are eager

Finance Minister AMA Muhith said he had directed developing bond market as investors from home and abroad were agog. Stakeholders, on the other hand, favoured cash dividends from the listed firms instead of bonus for a vibrant equity market.

He views that the capital market is now on the path of stability, being run by adequate rules and regulations.

The finance minister notes that it now needs development of bond market as there are many institutions ready to issue such borrowing tools and investors are also eager.

"I`m now satisfied with the stock market as it is now footed on strong foundations," Mr Muhith said while speaking as chief guest at a seminar of merchant bankers at a city hotel on Wednesday.

"This is very unfortunate that the country, in real terms, has no bond market," he told the meet.

The minister said he had already given instructions to BSEC (Bangladesh Securities and Exchange Commission) for taking initiatives on the matter.

"To my mind, many want to invest in the bonds as it is much less risky than the stocks,"

He lamented that two debacles of the share market unfortunately happened during the rule of the Awami League and hoped that during the next two years of the government the market would be more attractive to the investors.

Bangladesh Merchant Bankers Association (BMBA), a group of 54 merchant bankers, organised the programme styled `Bangladesh Capital Market: Present Scenario and Future Prospect`.

Md Moniruzzaman, managing director of IDLC investment, presented keynote on the issue while managing director of Chittagong Stock Exchange Saifur Rahman Mazumdar, Prime Finance Capital Limited CEO Dr Mosarrof Hossain and secretary-general of the BMBA Khairul Bashar Abu Taher Mohammed were discussants.

State Minister for Finance and Planning MA Mannan and chairman of Bangladesh Securities and Exchange Commission Dr. M. Khairul Hossain joined the function as special guests.

Speaking at the seminar Dr. M. Khairul Hossain said foreign investment has been rising in the country`s capital market mainly due to strong macroeconomic fundaments of the country.

He said the stock market will be most lucrative destination for the foreign investors as the economy has been expanding on sustained basis coupled with demographic dividends.

He said foreigners now invested Tk 160 billion in the country`s stock market.

The BSEC chair said many foreigners have expressed their intentions for 25 per cent stakes in the exchanges.

He believes that such strategic partnership will help grow foreign investment in the equities.

"I think there will be a win-win situation shortly on the issue," the chairman of the stock-market-regulatory body told his audience.

He said the regulatory body is now preparing rules for introducing securities derivatives in the country.

"We are expecting derivatives in the country within 2018," Mr Hossain said.

 The BSEC chairman said they had already issued guidelines for funds to be required for the venture capital. Many IT-based companies need such funding for their innovations.

The BSEC chairman was critical of the poor institutional investments in the capital market. He said: "Institutional investment now accounts for less than 8.0 per cent with the bourses which is much lower than in any country."   

The chairman said institutional investment from provident fund, pension fund, and similar types are required for the capital market.

The keynote speaker said the share of capital market as a percent of GDP now stands at 18.46 per cent which is much lower than the world average of 217 per cent.

He said the there is need for allowing provident funds to be invested in secondary market as the current law is not clear.He suggested creating pension funds and allowing a portion to be invested in the listed equities.

He said the multinational companies need to be listed by policy supports.

Dividend policy may be clearly spelt out for listed government companies.

He said bonus shares are not real dividends. "No cash flow happens for company."

Minority shareholders are neglected in the country and their grievances need to be addressed. He said companies may have a designated person to whom shareholders can send their grievances and complaints.