Shamsul Huq Zahid |
June 21, 2020 21:26:54
Earlier than the primary case of Covid-19 was detected within the nation on March 08 final, the stock market had been in a moribund state. All makes an attempt to buoy it up failed miserably.
Buying and selling within the bourses remained suspended between March 26 and May 30, the interval declared as vacation by the federal government as a part of the measures to comprise the illness. The lengthy vacation did harm the financial system badly. Companies needed to rely losses due to the unofficial shutdown in most locations. However the suspension of buying and selling operations, apparently, saved the stock market from plunging additional.
Now the market is open and its pitiable state stays past description. Actually, the pandemic has pushed one other nail within the coffin of the nation’s stock market.
The bourses in an unprecedented transfer had launched ‘flooring charge’ earlier than the buying and selling was suspended in late March. That’s nonetheless in place. So, the market is now tied to a synthetic stage. Traders desirous to get rid of stocks beneath the ground charge is unable to try this.
In such a state, the indices usually are not allowed to plunge beneath a sure stage. This has resulted in very low each day turnover, lower than Tk. 1.zero billion.
In opposition to this backdrop, Finance Minister AHM Mustafa Kamal on June 11 positioned his price range proposals in parliament. Naturally, traders did anticipate some measures that will assist the market get well to a sure diploma.
In his price range speech, the finance minister learn out an extended listing of measures taken to this point to ‘rejuvenate’ the market and produce ‘dynamism’ into the sector. The measures embody the availability to take a position extra funds by banks in stocks. Some weeks earlier than the pandemic hit the nation, the central bank allowed every of the scheduled banks to take a position Tk.2.zero billion within the stock market. Nevertheless, the banks had been discovered not interested by investing funds in stock market due to different compulsions. So, the market continued to limp.
With the novel coronavirus triggering an unprecedented well being and financial emergency, the stock market stands to lose additional. Actually, the market has change into roughly a non-entity now.
Within the price range for the upcoming fiscal, a recent alternative has been supplied to take a position undisclosed funds in some sectors, together with actual property and stock market, by paying penal tax at a nominal charge. No company would ask any questions concerning the supply/s of the funds to be invested underneath the ability.
As anticipated, the transfer has triggered criticism from totally different quarters. It appears, the federal government would stick with it until the top, however none is bound concerning the closing end result. Within the earlier years barring 2007-08, the cash whitening provision integrated within the price range did fail to ship the supposed outcomes.
There may very well be some funding of the contaminated cash in the true property sector, however the identical may not occur within the case of stock market underneath the prevailing circumstances.
Actually, the proposed price range for the following fiscal doesn’t have something new for the stock market. It will have mattered a little bit had the finance minister supplied just a few extra incentives within the new price range.
The continuing interval is an uncommon one. Most financial actions have come to a grinding halt. None expects a stock market that’s already beset with many issues to be unusually lively.
True, pandemic has turned the state of affairs worse for the nation’s stock market. However, the truth is that even throughout regular time, its efficiency had been dismally poor.
The moot drawback the market has been dealing with for a very long time is the shortage of traders, each short-term and long-term. A market with out a first rate variety of traders is a useless place.
There may very well be an extended debate why the traders have abandoned the market. That will probably be a meaningless train. The related policymakers have tried many measures to encourage the traders to get again to the market, however they’ve by no means tried sincerely to search out causes behind the latter deserting the market.
The truth is that traders have by no means been in enough numbers within the Bangladesh market aside from a few occasions—1996 and 2009-10. On each the events, there had been a surge of traders, if one likes to name them so. Traders of their hundreds from all corners of the nation made a mad rush to the market with an intention to change into wealthy in a single day. So, the inevitable happened—the market had crashed and most traders vanished in a single day, for good. The market collapsed as a result of the costs of most stocks, each good and unhealthy, had reached to an unsustainable stage.
Globally, the stock markets are in unhealthy form due to the pandemic impact, however the state of affairs will change, perhaps, after just a few months. Traders will make a comeback. However, the Bangladesh market may not witness any main change. So, the related policymakers ought to attempt to find causes behind the traders’ lack of curiosity in coming to the market and handle these accordingly. The Bangladesh Securities and Alternate Fee (BSEC) has obtained new chairman and members. They may be actually interested by getting the market again to trace.