Photo: Messenger
In the weeks following the 12th National Assembly elections, the previously prevalent political unrest has significantly subsided. This development is proving to be a boon for the common people in the country, as a positive impact begins to manifest. Notably, the diminishing crisis of confidence in the capital market is easing apprehensions among investors.
A noteworthy trend is the resurgence of interest among both sideline investors and new investors in making investments. This shift in sentiment is translating into a notable upswing in the capital market, observed throughout the week spanning from January 8 to 11.
Investors have seen a significant return of 5,119 crores, marking a positive development in the market. Furthermore, the lingering issue of the liquidity crisis, which has been a major concern, is showing signs of reduction. Transactions in the market have nearly doubled, indicating a strengthening trend. If this positive momentum persists, there is a likelihood that the regulatory body, the Bangladesh Securities and Exchange Commission (BSEC), may soon lift the floor price (minimum price) in response to the improving conditions in the capital market.
To support this positive trend in the capital market, the Capital Market Stabilisation Fund (CMSF) has proactively established a special fund amounting to Tk 100 crore. The company has also declared loan assistance to further bolster the market. Consequently, the imposition of the floor price, which has been in effect for approximately two years since its initiation in the second phase on July 28, 2022, is expected to be lifted.
In response to inquiries, BSEC Chairman Professor Shibli Rubayat-Ul-Islam informed The Daily Messenger that the capital market is displaying increased strength following the recent election. He expressed optimism that if this positive trend persists, the regulatory body is likely to lift the floor price at any moment.
Regarding the anticipated lifting of the floor price, BSEC Chairman Professor Shibli Rubayat-Ul-Islam clarified that the decision is not restricted to January or February; rather, it will be executed promptly when the market conditions are favorable. He mentioned that a meeting has already taken place with all relevant institutions and individuals associated with the market. They have been advised to be prepared for the removal of the floor price as soon as the market demonstrates positive stability.
Abu Ahmed, a former professor of the economics department at Dhaka University and a capital market analyst, has expressed concerns over the impact of the floor price, stating, "The backbone of the capital market has been broken due to the floor price. The market has incurred significant losses as a result, with only 300-400 crores of taka being traded out of the total 2000 crores in the market. To restore momentum to the capital market, there is no alternative but to abandon the floor price."
Dr. Hasan Babu, Chairman of the Dhaka Stock Exchange (DSE), noted that the 12th National Assembly elections held peacefully on January 7 marked a positive turn of events. Following the election, a new Council of Ministers, led by Prime Minister Sheikh Hasina, has been formed to govern the country for the next 5 years. The reduction in political unrest has contributed to a positive atmosphere, and the capital markets are gradually regaining strength. Dr. Babu emphasised that now is an opportune moment to swiftly lift the floor price and return to normal trading. He assured that all necessary initiatives will be taken in the interest of the capital market.
Saiful Islam, the newly appointed president of the DSE Brokers Association (DBA), has advocated for the removal of the floor price to promote a more dynamic capital market. He emphasised that the transaction volume under the floor price has not met expectations, indicating the need for various initiatives to boost trading activities. Islam's perspective aligns with the broader sentiment among market experts, suggesting that lifting the floor price is a crucial step to enhance market dynamics.
Sayedur Rahman, the President of the Bangladesh Merchant Bankers Association (BMBA), has expressed the view that the floor price is a temporary decision made by the regulatory body for the capital market. He suggests that considering the best interests of the market, the decision to maintain the floor price should be reevaluated.
Minhaj Mannan Emon, a former director of the Dhaka Stock Exchange (DSE), has expressed the opinion that a healthy and dynamic capital market cannot sustain a floor price for an extended period. He emphasises the importance of transparent decision-making and suggests that implementing a floor price in a discreet manner, even under the oversight of the regulatory body, may lead to negative consequences.
Messenger/Disha
