Stocks
Big Changes Expected in the Stock Market After Elections
Professor Shibli Rubayat-ul-Islam, the Chairman of the Bangladesh Securities and Exchange Commission (BSEC), has stated that our capital market faces no issues, but the challenges are international in nature. These challenges have transformed into internal problems. Various issues from abroad have affected us. However, significant anticipatory changes are expected during the upcoming elections because there will be a shift in people’s mindset. Over the next five years, businesses, banks, and other institutions will be established. Foreign investments are expected to flow in post-election. To understand the expectations and achievements for the stock market, especially in the context of the economy, BSEC Chairman shared insights in an exclusive interview on Orthosongbad with the financial news reporter Kafil Ahmed.
At present, he mentions that when people refer to the capital market, they typically think of the secondary market. However, in the stock market, there are various types of products. For instance, over the past year, there has been significant progress in the bond market. Treasury bonds and treasury bills have already been introduced, and trading has commenced. We are introducing various types of sukuk and other bonds. In the future, orange bonds and pink bonds are expected. Work is being done on derivatives, and Central Counterparty Bangladesh Limited (CCBL) is becoming active. Our commodity exchange will be established.
The Chairman of BSEC mentioned that in the past, our predecessors considered the secondary market as the capital market. They did not recognize all the components of the capital market. Those who were in charge in the past did not think about the elements of the capital market when they were responsible. My question is why they did not do that. We are working on the missing elements in the capital market that were absent during the past fifteen to twenty years. If those elements had come earlier, today the face of Bangladesh’s capital market would have been entirely different. We are addressing these missing elements amidst the ongoing battle against the COVID-19 pandemic.
He further explained that they are focusing on international aspects to make the secondary market more diverse, akin to the floor price. Due to the departure of funds from the stock market, the government has been blamed repeatedly. This blame does not always fall on the government; sometimes it is due to certain groups or individuals. Those who are 80 percent retailers in the market take various actions without considering the market. In what we are doing, criticism is inevitable. We are providing security to ordinary investors in the market as they constitute 80 percent. However, when compared to institutional investors, who also constitute 80 percent, our actions are being evaluated. If they make decisions like institutional investors, today the people of our country will be financially independent.
“We are working in a way that, with the changing character of the market, institutional investors will gradually increase. The way we are issuing licenses, approvals, and bringing in large groups to the market, we will be able to manage many things simultaneously with foreign entities. Already, big investors from both domestic and international arenas have started coming in. We will never let ordinary investors incur losses and lose their funds. We secure the capital, and then the benefits and gains will follow.”
Speaking about the minimum 30% public shareholding of companies listed on the stock market, the Chairman explained that it wasn’t given much attention in the past. However, they are now addressing this issue, and about 13-14 companies have been identified. Among these, about 7-8 companies are relatively weak in their position. We are putting significant pressure on those companies. For those struggling due to economic conditions, the board has given them time, but they must maintain the 30% shareholding.
BSEC Chairman Professor Shibli Rubayat-Ul-Islam mentioned that many large companies are now coming with rights bonus shares. However, their floating shares were low, and they did not have a 10% presence in the market. These companies are now coming with rights bonus shares to comply with the law. Due to the absence of floating shares in large companies, the price of a single share is in the range of thousands of Taka. Why does this happen? Because there is no floating supply. These companies’ shares are not as widely available to the general public in the stock market but are mostly held by the companies themselves or their stakeholders. All of these issues are being addressed now.
He also emphasized that we are moving forward in every aspect. He explained that we cannot dwell on past situations or look back; instead, we need to prioritize our current reality. The economic situation is not good for everyone, and not all businesses and trades are thriving. These factors need to be taken into consideration. He stressed that to understand reality, it is necessary to give consequences, and creating unrest among people will not lead to anything positive.
Regarding small and medium enterprises (SMEs), the BSEC Chairman, Professor Shibli Rubayat-Ul-Islam, stated that many companies in the SME market with paid-up capital ranging from 30 to 45 crore Taka, but the original market capitalization is around 1.5 to 2 crore Taka. The number of such companies has decreased from more than 50 to possibly around 12 or 13. Among them, 6-7 companies might not exist anymore, and the remaining ones are being rectified.
BSEC Chairman further stated, About government companies, mentioned that their boards and governing bodies hesitate to come under the corporate governance regulatory authority AGM. If well-established companies come, there would be many benefits to the government’s revenue account, and the government would become powerful by getting equity or investment returns. The lack of enthusiasm among companies is due to their boards. They do not want to come under any governance umbrella. Most companies have governance issues and are incurring losses. I think a good board will come among them. When they do, for their well-being, they will follow the corporate governance code for international recognition.
Regarding rumors and misinformation in the stock market, the Chairman commented that due to spreading false information or rumors on social media, many individuals have been arrested, and cases have been filed. Actions are being taken against those who spread rumors without evidence. He mentioned that they don’t publicly disclose the information about these actions, but it is essential to counteract false information to maintain peace in personal and family life.
“Amidst a dynamic week in the U.S. stock markets, where indices experienced a spectrum of movements, investors were met with a mixed bag of outcomes. While the Nasdaq Composite displayed a robust surge, bolstered by a significant hike of 184 points, other key indices such as the S&P 500 and DJIA demonstrated divergent trends. Despite the S&P 500 showing a negative trajectory, the DJIA Index witnessed a noteworthy ascent, reflecting the market’s resilience to certain headwinds.
However, amidst this volatility, smaller-cap indices like the Russell 3000 and Russell 2000 showcased their own distinct performances, hinting at underlying market dynamics. This nuanced overview encapsulates the multifaceted movements that characterized the U.S. stock markets during the week, offering insights into the varying factors influencing investor sentiment and market behavior.”
Reviewing the U.S. Stock Markets, the Nasdaq Composite, recorded a decent hike of 184 points, reaching a closing value of 16,340 points by the end of the week. Similarly, the S&P 500 index showed a negative trend, adding 95 points to settle at 5,222 points. Meanwhile, DJIA Index experienced a notable hike, adding 837 points during the week and concluding at 39,512 points after a week of gain.
In contrast, Russell 3000 Index saw a gain in week performance, with a slight hike of 52 points to reach 2,986 points by the end of the week.
Moving to Russell 2000 Index, demonstrated a notable gain of 24 points, ending the week at 2,059 points.
In the Outgoing week, the European stock market displayed a gaining performance.
Here is the data on the weekly performance of the European Stock Market, The STOXX Europe 600 index, which is considered a leading benchmark for the European market and covers approximately 90 percent of the market capitalization across 17 countries, reported a added of 15.23 points to close at 520.76.
The United Kingdom’s FTSE 100, one of the most widely followed indices in Europe, also showed a significant surge, adding 220 points or finishing the session at 8,433.
In Germany, the DAX 30 index, gaining by 771 points to reach 18,772, while France’s CAC 40 increased by 262 points to stop at 8,219 at the end of the trading day.
Italy’s FTSE MIB, which covers the top 40 stocks traded on the Milan Stock Exchange, increased by 1,028 points to 34,657. However, Spain’s IBEX 35, added by 251 points, to close at 11,105.
A review of South Asian stock markets shows that India’s Bombay Stock Exchange (BSE) index BSE Sensex has lost 1,214 points during the week. At the end of the week, the index stood at 72,664 points. On the other hand, the Nifty-50 index of the country’s National Stock Exchange gained by 420 points last week. At the end of the week, the index stood at 22,055 points.
Pakistan Stock Exchange Index ‘KSE 100’, adds 1,139 points last week. After a week of gaining, the index settled at 73,110 points.
On the other hand, The Sri Lankan stock market index hiked, and the Colombo Stock Exchange index ‘ASPI’ increased by 114 points in a week. After a week the index settled at 12,518 points.
Bhutan’s stock market index ‘BSI’ adds 9 points hence the index stood at 1,515 points throughout the whole week. Nepal’s ‘NEPSE’ lost 32 points, therefore the index stands at 1,966 points.
Hence Dhaka Stock Exchange: The benchmark index ‘DSEX’ added by 45.4 points or 0.81 percent, in the outgoing week. At the end of the week, the index stands at 5,661 points.
