Ensure sustained growth of stock market, not any bull run

18 January 2021

COUNTRY'S stock market needs listing of big companies to help deepen and widen its base and reduce speculation-based trading. Experts suggested bringing state-owned enterprises (SoEs) and other derivatives like mutual funds, bonds and securitisation of large infrastructure projects in the capital market. The characteristics of the country's capital market included insufficient due diligence, poor quality valuation of securities and low market capitalisation. We want sustained growth of the market, not any bull run. Healthy growth of the capital market is fundamental for a healthy economy.
Economists said accounts and audit system in the capital market must be improved while the financial reporting council (FRC) must take strong role. The investors are unable to purchase good stocks at fair value in this market. We need professionals in the capital market along with an effective move to contain insider trading and market manipulations. The regulator needed to provide good governance to bring good companies in the market. The SEC said some people come to the market with an intention of vanishing with the investors' money, but the authorities are taking criminal actions against them.
Audit standards must be increased to restore investors' trust in financials which are cooked off and on. Some 70-80 per cent of the trading in the capital market is based on speculation. As Bangladesh looks to make headway in its development journey, establishing a robust capital market, one constituting of a more diverse portfolio of financial instruments, will be integral. The government has plenty of jobs to make the capital market healthy, robust and sustainable, including pushing big companies, large projects, and multinational companies to list under the capital market. Besides, the government should establish transparency, accountability, good governance in the market with cutting edge technology and anti-fraud system thus small investors interest remain to uphold. Besides, the SEC and the government should be the watchdog of the capital market and custodian of small investors' interests.

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