FE Report (February 28, 2011)
Monday, February 28
BB launches electronic fund transfer network today
Sunday, February 27
Five IPOs hit hurdles
Star (February 27, 2011)
The initial public offerings (IPO) of five companies, now awaiting regulatory approval to float shares worth Tk 721 crore, are uncertain on the back of a current bearish trend on the stockmarket.
The five companies, including a listed one, submitted IPO proposals to the Securities and Exchange Commission (SEC) under fixed price method. They are Central Depository Bangladesh Ltd (CDBL), STS Holdings Ltd, GBB Power Ltd, Rangpur Dairy and Food Products Ltd and Shurwid Industries Ltd.
Of them, CDBL plans to float four crore ordinary shares of Tk 10 each, with Tk 50 as premium. CDBL operates the central depository system for electronic share transfer. STS Holdings will offer three crore primary shares of Tk 10 each, at an issue price of Tk 125 including Tk 115 as premium.
GBB Power will float 2.05 crore ordinary shares of Tk 10 each, in addition to Tk 60 as premium, while Shurwid Industries will float 1.4 crore shares of Tk 10 each.
Rangpur Dairy will come up with 1.64 crore primary shares of Tk 10 each at an offer price of Tk 25, including Tk 15 as premium.
Bangladesh Shipping Corporation, which is a listed company, will go for repeat public offering (RPO). The company, however, did not finalise the RPO size, which will be announced after primary approval.
Officials at Securities and Exchange Commission (SEC) said, although the five companies' IPO proposals are pending for approval, more information are needed from some of them.
“The commission has already sent letters to them,” said Yeasin Ali, a member of the SEC.
Ali said it will not be a proper time to give nod to those IPOs, as the secondary market is now on a declining trend. The SEC will consider the IPOs when the market stabilises, he added.
Is it ethical to allow MF managers to play with naive investors' money?
FE Report (February 27, 2011)
In the market commentary of Financial Express published in February 24 I have found that a fund manager in anonymity had wanted to say that "most mutual funds have already invested their available money in the capital market up to the stipulated limit.
To invest more in the capital market, such funds will need to further augment their paid up capital. For this capital, the market regulator -- Securities and Exchange Commission (SEC) -- will have to amend the existing law."
Its very difficult to verify whether this person is really a fund manager or a mutual fund manipulator or placement grabber. But his/her intention is clear. He/She wants the opportunity to issue right and bonus share for closed end mutual funds and take the benefit of irrational price hike. He/She is looking for bonus not funds to manage and provide liquidity support to ailing market. Because there is another legal vehicle - open end fund where there is no bar to augment capital of the fund.
There are some rare instances where some closed funds in abroad had provided right or bonus but its not a common practices globally. In Bangladesh a small fund recently provided right and bonus. But its reality was different and exception should not be an example. There were enough bitter debates on that issue. So I don't want to go to that point. Rather I want to evaluate performances of some mutual funds.
Even if general index is not the right barometer to measure the performance of the mutual funds but it can give us some insight regarding their performance. During 2010 general index gained 83% but except ICB NRB none of the above mentioned big funds can achieve even 50% of the market return. But during the market crash their performance are almost as bad as that of the market. More alarmingly out of 35 mutual funds currently market NAV of 14 mutual funds are lower than cost NAV. And performance of the first private sector Prime finance open end fund is very poor since inception. So its clear none of the asset managers is able to generate sufficient return during the bull market nor they able to protect their funds or minimize risk during the market downturn. Even they are less good than prudent retail investors. They are unable to protect the interest of investors of their fund. So what service they are actually providing at the expense of high management fee? Because of this they are raising voice to increase quota in IPO. Without free quota in IPOs their performance would be worse.
Recently SEC gave nod to 11 mutual funds that are going to raise huge amount of money from general public. But did SEC check their track record? It's dangerous. It's unethical to give license to play with poor people's money to novice managers. SEC should allow funds case by case after judging the competence of the fund managers.
Now everybody is trying to catch fish blackmailing SEC in troubled time. But SEC as a protector of investors should act stiff. It's not SEC's role to manage liquidity to rescue market. Their duty is to provide regulatory framework and prepare an even playground for all participants.
To bring discipline in mutual funds sector it is a must to overhaul the outdated mutual funds rules. It is necessary so that no player can take unethical advantage. Sponsor's minimum portion in fund should be increased from 10% to at least 25%. Stringent professional examination should be introduced for portfolio managers. Quota on IPO for mutual funds should be abolished. Because its not good to subsidize poor performers rather let them to learn playing in a even play ground.
SEC should monitor risk management methodology of the managers. Introduce a benchmark index to evaluate the performance of all mutual funds. Mutual funds should publish cash ratio on weekly basis to see how much portion of the fund they are actually investing in capital market instruments. SEC should provide license to more competent managers in the industry to increase fair competition. By the side of the mutual funds fund manager should be allowed to manage personal and institutional wealth. So they can provide more services.
Although recent market crash is painful but it has given us a good opportunity to overhaul the capital market system. SEC should not lose their steam rather they should play strict regulatory role to bring back discipline in the market.
Demutualization: Will it be a knife to save lives or the one to take lives?
FE Report (February 27, 2011)
After the hot topics like book building, share market efficiency, margin loan limits, implementation of Basel (II) and many other issues of finance, demutualization of stock exchanges is becoming a new issue.
Why demutualization? Is it something for which we can scream out loud "UREKA". No, actually it is not something for which we can do that. In 1993, the Stockholm Stock Exchange became the first exchange to demutualize. Since then, 21 exchanges in the developed markets have demutualized - representing almost 40% of the membership of the World Federation of Exchanges. (Source: World Federation of Exchanges Annual Report and Statistics).
The figure 1.1 shows the worldwide market capitalization of demutualized stock exchanges which is 52 %(data 2001) of the total. The figure 1.2 shows the total market capitalization of demutualized stock exchanges only in Asia which is 76%(data 2001) of the total. So it is not something new to the world but definitely it is something new to us. Let us start with what is demutualization? Demutualization can be defined as a process by which a mutually owned stock exchange is converted into a company owned by shareholders by transforming its existing legal structure as an into a business corporation. In contrast, a mutual stock exchange is a non-profit, mutual organization with monopoly power, owned by its members. Here, the owners are at the same time its clients who are the final consumers of its trading services. They share the profits of the company, based on their participation in the ownership.
A demutualized stock exchange will provide most of the same services as a mutual stock exchange but in a little bit different way. A mutual stock exchange is owned by the members and most of the time it tends to work favouring the interest of the members alone. This tendency sometimes undermines the rights of other stakeholders and participants. In a demutualized stock exchange, ownership is divided between members and outsiders. This is to some extent a balanced approach to remove conflicts of interest and enhancing management accountability.
A mutual stock exchange is unable to respond quickly and decisively (this point is much clear when we take the recent decision-making process of our stock exchanges into consideration as example). It acts well when the interests of all the stakeholders are homogeneous but undergreater diversity of stakeholders' interest and dynamic business conditions, the consensus decision making of a mutual governance model becomes slow and cumbersome. A demutualized stock exchange with a profit-oriented corporate model, will enable management to take actions that are in the best interest of customers and exchange itself. Above all, with the separation of ownership from its trading activities, there will be greater independence from its members regarding its regulatory functions.
Investor participation is another key advantage of a demutualised stock exchange. In a mutual structure stock exchange, only brokers/dealers may be the members; therefore, power shifting may not occur. A stock exchange has many stakeholders- participating organizations, listed companies, and institutional and retail/individual investors. A need to shift the power from one group of stakeholder to another group of stakeholder within the stock exchange may arise. Separating trading rights from ownership will make this shift to occur easily and in a way which is more feasible economically and politically. Most importantly, attracting institutional investors and retaining them by accommodating their needs will be much easier as shifting of powers will occur automatically in a more flexible demutualized stock exchange. We must not forget that in a demutualized stock exchange, institutional investors are not only customers but can be a potential investor too.
Finally, demutualization will also provide resources for investment. Many research papers have already identified the need for investment in our stock exchange infrastructure. As we all know an efficient capital market is defined as a market in which stock prices reflect all the information available to the market about future economic condition of the country and future profitability of the listed companies. To make this happen, an infrastructure of sound information system is essential which requires a large amount of capital investment. Capital that will be raised from an initial public offering (IPO) or a private placement of a stock exchange can provide an opportunity to invest in its information system and make its market more efficient.
All the possible outcomes (benefits) described above are already proven in many foreign markets, so there is no doubt about the benefits. On the other hand, we should not forget that demutualization is only a financial tool; it will not itself bring the benefits. It depends on how we use this tool. As proper use of this tool can bring benefits, its abuse at the same time can cause disaster. It is a knife, and the outcome depends on how we are using it. Are we going to use it like a doctor or we are going to use it like a killer?
Demutualization in the developed market is mainly market-led. In short, the objective is to be competitive and mainly initiative is taken by the exchange itself. By contrast, demutualizations in the emerging markets are largely policy-led and initiatives are mainly taken by the government, which is also applicable in our case.
Let us see what are going to be the main challenges for us if we go through this process of demutualization and what we can possibly do if we want it to be fruitful. There are two issues that are to be considered delicately to have fruitful result and they are regulations and financial stability.
Regulation: Stock exchanges usually act as a self regulator and their regulatory functions cover the areas of trading, market manipulation and members' activities. As after the demutualization, stock exchange will become a for-profit organization; so there remains a possibility that regulatory functions may be compromised with the goal of maximizing profit. After demutualization there will be no member, there will be either a customer or an owner or both, at the same time. Will a demutualized self regulated stock exchange be brave enough to conduct its regulatory functions precisely and to impose penalties on those who are its major provider of revenues? This is always a big question that needs to be answered. This problem of regulation even exists in a mutual stock exchange, which might not be as much severe as that of a demutualized stock exchange where drive of profit maximization can make it more severe, but it does exist even in a mutual one. Creation of a separate regulatory entity can be a solution to this problem. As in emerging markets, because the demutualization is policy led, a financial council can be formed which will be chaired by the ministry of finance. Another solution which will be costly but will bring more transparency is to outsource an independent third party regulatory body.
Financial stability: Financial stability is another big challenge which needs to be covered. Revenues earned by the stock exchanges are mainly from membership subscription fees, transaction fees, service fees etc., and if a mutual stock exchange has deficits, it enjoys financial coverage from its government and other donor agencies. As in emerging economies like Bangladesh, a mutual stock exchange is seen as an institution, serving national interest. But the question is: Who will guarantee the financial stability of a for-profit demutualized stock exchange? Its profitable existence is not granted by the for-profit demutualized structure itself. So what happens when a major or the only stock exchange with the demutualized for-profit structure faces financial difficulties and goes bankrupt? We cannot allow this to happen, it would be too big to let go. To avoid such occurrences, liquidity ratios and other financial ratios need to be closely monitored in a timely fashion to ensure a good financial health of a stock exchange with for-profit demutualized structure. To be more secure and keeping in mind that we are risk averse, a reserve fund can be created, which will act as a cushion against such a sort of financial shocks.
In conclusion, what can be said is that if we want to get to the other side of the river, we need to get into the water and swim; no one is coming with a boat for us, or even if someone comes, then it would not be for free. But without learning swimming techniques, jumping into the water would just be committing suicide. As we have set the goal to be on the other side of the river, let us learn the techniques and be well prepared first and if we can afford let us have a life jacket which will act as a cushion against risk and then jump into the river. To be more direct, demutualization is all good but let us not forget it is a tool which has a pre-requisite, it is just a knife and the output depends on how we use it.
BB revises guidelines on stress testing for banks
FE Report (February 27, 2011)
The central bank has revised guidelines on stress testing for the commercial banks to make the testing more effective, officials said.
Under the revised guidelines, the banks will have to submit their stress testing report to the concerned department of the Bangladesh Bank (BB) on a quarterly basis, instead of earlier half-yearly one.
Stress testing is a risk management technique used to evaluate the potential effects on an institution's financial condition of specific event and /or movement in a set of financial variables.
"We've revised the guidelines aiming to ensure the soundness and sustainability of the country's banking industry and make the banks more shock resilient," a BB executive director told the FE Saturday.
He also said the central bank has reduced the reporting period for the banks to know their financial strength through calculating risks in different portfolios more frequently.
"It has been decided that henceforth banks will carry out stress testing in line with the revised guidelines on a quarterly basis i.e. on March 31, June 30, September 30 and December 31," the BB said in its revised guidelines, issued Thursday last.
The banks will have to submit the report along with a soft copy within 30 days at the close of each quarter, the BB official said adding the reporting format has been designed in line with Basel-II framework.
The revised guidelines are articulated with a number of fresh issues including sensitivity analysis for interest rate-based stress test, along with duration gap. Such provisions were not incorporated in the previous guidelines.
"It will help the banks to understand the potential behaviour of various positions on their balance-sheets in circumstances of stress," the BB executive said, adding that it would also enable the banks to develop sound risk management practices.
This would ensure more safety and sustainability of the country's banking industry, he added.
The central bank puts stress on simple sensitivity analysis which provides ways to assess risks relating to credit, interest and exchange rates, share market exposure and liquidity position.
The BB has taken the move as many countries adopted it in the wake of the recession that rattled the global economy, particularly the financial sector.
The idea behind the stress test is to check out financial strength of banks and financial institutions and see how or whether they will be on a proper footing to stay afloat in difficult times.
The stress test has to measure what will happen with a bank if the economic situation worsens and the bank's difficulties increase.
Under the revised guidelines, the banks will have to submit their stress testing report to the concerned department of the Bangladesh Bank (BB) on a quarterly basis, instead of earlier half-yearly one.
Stress testing is a risk management technique used to evaluate the potential effects on an institution's financial condition of specific event and /or movement in a set of financial variables.
"We've revised the guidelines aiming to ensure the soundness and sustainability of the country's banking industry and make the banks more shock resilient," a BB executive director told the FE Saturday.
He also said the central bank has reduced the reporting period for the banks to know their financial strength through calculating risks in different portfolios more frequently.
"It has been decided that henceforth banks will carry out stress testing in line with the revised guidelines on a quarterly basis i.e. on March 31, June 30, September 30 and December 31," the BB said in its revised guidelines, issued Thursday last.
The banks will have to submit the report along with a soft copy within 30 days at the close of each quarter, the BB official said adding the reporting format has been designed in line with Basel-II framework.
The revised guidelines are articulated with a number of fresh issues including sensitivity analysis for interest rate-based stress test, along with duration gap. Such provisions were not incorporated in the previous guidelines.
"It will help the banks to understand the potential behaviour of various positions on their balance-sheets in circumstances of stress," the BB executive said, adding that it would also enable the banks to develop sound risk management practices.
This would ensure more safety and sustainability of the country's banking industry, he added.
The central bank puts stress on simple sensitivity analysis which provides ways to assess risks relating to credit, interest and exchange rates, share market exposure and liquidity position.
The BB has taken the move as many countries adopted it in the wake of the recession that rattled the global economy, particularly the financial sector.
The idea behind the stress test is to check out financial strength of banks and financial institutions and see how or whether they will be on a proper footing to stay afloat in difficult times.
The stress test has to measure what will happen with a bank if the economic situation worsens and the bank's difficulties increase.
Thursday, February 24
SEC lifts curbs on Alliance Securities CEO
FE Report (February 9, 2011)
The securities regulator Tuesday lifted the curbs on the chief executive officer of Alliance Securities after investigators gave him a clean chit on his roles in triggering a market collapse last month, an official said.
The Securities and Exchange Commission last month banned Roy and five other heads of brokerage firms for a month for their alleged roles in sparking aggressive sales that sharply sank the market on January 20.
The six firms were also banned from trading for a month.
SEC Spokesman Mohammad Saifur Rahman said the commission has relieved Mr. Roy of all charges as its investigators found lack of evidences against him.
"The suspension imposed on his activities has been withdrawn based on the report of the investigation," he said.
The decision comes a couple of days after the SEC lifted the suspension orders on the six brokerages including Roy's Alliance Securities considering the interest of their tens of thousands of clients.
The securities regulator Tuesday lifted the curbs on the chief executive officer of Alliance Securities after investigators gave him a clean chit on his roles in triggering a market collapse last month, an official said.
The Securities and Exchange Commission last month banned Roy and five other heads of brokerage firms for a month for their alleged roles in sparking aggressive sales that sharply sank the market on January 20.
The six firms were also banned from trading for a month.
SEC Spokesman Mohammad Saifur Rahman said the commission has relieved Mr. Roy of all charges as its investigators found lack of evidences against him.
"The suspension imposed on his activities has been withdrawn based on the report of the investigation," he said.
The decision comes a couple of days after the SEC lifted the suspension orders on the six brokerages including Roy's Alliance Securities considering the interest of their tens of thousands of clients.
BD Finance Securities Acquire DSE Membership form Equity Resources Limited
FE Report (February 9, 2011)
Equity Resources Limited has transferred its DSE membership No. 030 to BD Finance Securities Limited, a newly formed company.
In this connection, a Vendor Agreement was signed between the two companies in the city recently, said a press release.
Chairman of BD Finance Securities Anwar Hossain and Director of Equity Resources Mohammed Bin Quasem signed the agreement on behalf of their respective sides.
BD Finance Securities was incorporated on December 28, 2010 with the equity participation of Bangladesh Finance And Investment Company Limited (BD Finance), Anwar Landmark Ltd., City General Insurance Company Ltd. and other sponsors.
Directors of major shareholders of BD Finance Securities namely Bangladesh Finance And Investment Company Ltd. (54.54 per cent), Anwar Landmark Ltd. (20 per cent) and City General Insurance Company Ltd. (10 per cent) and officials of those companies and Equity Resources were present on the occasion.
In this connection, a Vendor Agreement was signed between the two companies in the city recently, said a press release.
Chairman of BD Finance Securities Anwar Hossain and Director of Equity Resources Mohammed Bin Quasem signed the agreement on behalf of their respective sides.
BD Finance Securities was incorporated on December 28, 2010 with the equity participation of Bangladesh Finance And Investment Company Limited (BD Finance), Anwar Landmark Ltd., City General Insurance Company Ltd. and other sponsors.
Directors of major shareholders of BD Finance Securities namely Bangladesh Finance And Investment Company Ltd. (54.54 per cent), Anwar Landmark Ltd. (20 per cent) and City General Insurance Company Ltd. (10 per cent) and officials of those companies and Equity Resources were present on the occasion.
BoI relaxes rules for foreign investment
The investment board has relaxed rules to give work permits to foreigners in a bid to attract more foreign investment into public and private sectors.
According to the revised guidelines that came into effect recently, the tenure of a work permit for a foreign worker is now two years instead of one.
The Board of Investment (BoI) has also simplified the rules for foreign companies and organisations to open new branches and representative offices here.
The new rules made it mandatory for every foreigner to take a work permit from the BoI before making new investment in Bangladesh.
The foreign investors will also take tax identification number (TIN) and submit income tax clearance certificate to the BoI.
The investment board will also make recommendations to Bangladesh missions abroad on the potential recruits or investors.
The BoI has also decided to create a 'data bank' to collect details of the foreign investors. However, members of the United Nations and foreign ambassadors will not need any work permit.
The foreign investors can contact the BoI by email and apply online for work permits.
According to the revised guidelines, foreign institutions should give priority to the citizens of Bangladesh during recruitments.
If the Bangladeshis are not found eligible, they can recruit foreigners.
Before hiring from abroad, the foreign companies should advertise in newspapers and online job sites for the post for the citizens of Bangladesh.
Foreign doctors and nurses will need to get registration from Bangladesh Medical and Dental Council and the Bangladesh Nursing Council to work in private hospitals in the country
Eight to vie for DSE elections ==> AGM on March 16
FE Report (February 24, 2011)
Eight members of Dhaka Stock Exchange (DSE) have submitted their nomination papers to contest against four vacant posts of DSE board of directors, officials said.
Wednesday was the last day for submitting nomination papers in the upcoming election of DSE board of directors scheduled on March 13.
The candidates who have submitted nomination papers are: Managing Director (MD) of Bulbul Securities Shahudul Haque Bulbul, former DSE senior vice president and MD of Rashid Investment Services Ahmad Rashid Lali, Ahsanul Islam Titu from Mona Financial and Securities, former DSE president and Royal Green Securities Chairman Abdul Haque, MD of MNZ Securities Monzur Uddin Ahmed, A Quader Chowdhury from Phoenix Securities and MD of Dhanmondhi Securities Mizanur Rahman Khan.
There are 24 directors in the DSE board. Among them, twelve will be elected through direct election and the remaining twelve will be selected from different chamber/trade bodies.
President, one senior vice president and one vice president will be selected from the elected members through the annual general meeting (AGM) on March 16.
Eight members of Dhaka Stock Exchange (DSE) have submitted their nomination papers to contest against four vacant posts of DSE board of directors, officials said.
Wednesday was the last day for submitting nomination papers in the upcoming election of DSE board of directors scheduled on March 13.
The candidates who have submitted nomination papers are: Managing Director (MD) of Bulbul Securities Shahudul Haque Bulbul, former DSE senior vice president and MD of Rashid Investment Services Ahmad Rashid Lali, Ahsanul Islam Titu from Mona Financial and Securities, former DSE president and Royal Green Securities Chairman Abdul Haque, MD of MNZ Securities Monzur Uddin Ahmed, A Quader Chowdhury from Phoenix Securities and MD of Dhanmondhi Securities Mizanur Rahman Khan.
There are 24 directors in the DSE board. Among them, twelve will be elected through direct election and the remaining twelve will be selected from different chamber/trade bodies.
President, one senior vice president and one vice president will be selected from the elected members through the annual general meeting (AGM) on March 16.
Sovereign credit rating for Bangladesh next month
FE Report (February 24, 2011)
Country's overall balance of payments (BoP) situation and the recent stock market debacle may feature prominently in the first review meeting on sovereign credit rating, to be held next month.
"Representatives of Moody's will review the country's sovereign credit rating from March 14 to March 16 this year," an executive director of the Bangladesh Bank (BB) told the FE Wednesday.
He also said Standard & Poor's (S&P's) will later review the sovereign credit rating in the middle of April this year.
Moody's Investors Service, a US-based credit rating agency announced for the first time its sovereign credit rating for Bangladesh as Ba3 on April 12 last, just after a week of Standard & Poor's (S&P's) sovereign credit rating as BB-.
During three-day review meeting, the Moody's representatives will meet different stakeholders, policy-makers, trade body leaders, senior bankers and journalists to know the country's latest socio-economical conditions.
"It's a continuous process. The sovereign credit rating will be reviewed every year to assess and know the country's latest economic situation," another BB official said, adding that the central bank is now working on the issue.
Sovereign credit rating is a strong tool for positioning Bangladesh in the global financial arena by providing relevant information and related indicators about its overall economic situation, experts said.
"Despite short term challenges in the stock market, the economy's long-term economic fundamentals are still believed to be stable and strong," a expert told the FE preferring anonymity.
The top global rating agency's review will start against the backdrop of a volatile situation in the country's stock market that has lost substantially, in terms of market capitalisation of all listed issues, leading to a sharp drop in its index, in past three months.
The benchmark index of Dhaka Stock Exchange (DSE), the country's prime bourse, generally known as DGEN, came down to 6018 point on February 23 from its highest 8918.51 point on December 05 last, the DSE data showed.
Besides, the country's overall balance of payments (BoP) has entered into a negative territory, mainly due to a widening trade gap, lower growth of inward remittances and a deficit balance in the financial account.
The overall BoP registered a deficit of US$686 million during July-December period of the current fiscal due to deficit of $978 million in financial account, a BB official said, adding that the BoP was at a surplus of $2.091 billion one year back.
The pressure on the external sector may continue in the near future, because of a still widening trade gap and the slowed-down rate of remittance inflows, the experts added.
The central bank officials said they are not worried about the negative position of the BoP as the country has 'a satisfactory level of foreign exchange reserve'.
"The country's foreign exchange currency reserve crossed $11 billion Wednesday from $10.99 billion of the previous day," another BB official said.
"Representatives of Moody's will review the country's sovereign credit rating from March 14 to March 16 this year," an executive director of the Bangladesh Bank (BB) told the FE Wednesday.
He also said Standard & Poor's (S&P's) will later review the sovereign credit rating in the middle of April this year.
Moody's Investors Service, a US-based credit rating agency announced for the first time its sovereign credit rating for Bangladesh as Ba3 on April 12 last, just after a week of Standard & Poor's (S&P's) sovereign credit rating as BB-.
During three-day review meeting, the Moody's representatives will meet different stakeholders, policy-makers, trade body leaders, senior bankers and journalists to know the country's latest socio-economical conditions.
"It's a continuous process. The sovereign credit rating will be reviewed every year to assess and know the country's latest economic situation," another BB official said, adding that the central bank is now working on the issue.
Sovereign credit rating is a strong tool for positioning Bangladesh in the global financial arena by providing relevant information and related indicators about its overall economic situation, experts said.
"Despite short term challenges in the stock market, the economy's long-term economic fundamentals are still believed to be stable and strong," a expert told the FE preferring anonymity.
The top global rating agency's review will start against the backdrop of a volatile situation in the country's stock market that has lost substantially, in terms of market capitalisation of all listed issues, leading to a sharp drop in its index, in past three months.
The benchmark index of Dhaka Stock Exchange (DSE), the country's prime bourse, generally known as DGEN, came down to 6018 point on February 23 from its highest 8918.51 point on December 05 last, the DSE data showed.
Besides, the country's overall balance of payments (BoP) has entered into a negative territory, mainly due to a widening trade gap, lower growth of inward remittances and a deficit balance in the financial account.
The overall BoP registered a deficit of US$686 million during July-December period of the current fiscal due to deficit of $978 million in financial account, a BB official said, adding that the BoP was at a surplus of $2.091 billion one year back.
The pressure on the external sector may continue in the near future, because of a still widening trade gap and the slowed-down rate of remittance inflows, the experts added.
The central bank officials said they are not worried about the negative position of the BoP as the country has 'a satisfactory level of foreign exchange reserve'.
"The country's foreign exchange currency reserve crossed $11 billion Wednesday from $10.99 billion of the previous day," another BB official said.
- Dhaka-Ctg 4-lane highway project faces uncertainty
-
Thousands protest high food prices in Delhi - Crises in ME, African nations to hit manpower export hard
- Concern over public safety after any major tremor
- Illegal hoarders to face music, PM tells JS
- Clampdown in Tripoli as protesters close in
- City AL leader, driver murdered
- Pakistan defeat Kenya
- President leaves for Kuwait tomorrow
- Jewelry shop looted in city
- weather
Wednesday, February 23
SEC finds lackings in margin loan guideline
FE Report (February 23, 2011)
The securities regulator sent back the merchant banks' guideline on margin loans, terming it "incomplete and unclear" and demanding incorporation of individual client's limit in the modus operandi, an official said Tuesday.
The Securities and Exchange Commission made the observation when the merchant bankers association submitted its guideline on margin loans to the regulator at its office in Motijheel.
SEC officials discussed the draft with the association members and sought some changes in the planned guideline, pointing out some gaps and recommending a few suggestions so as to make it investor-friendly.
"We told them to make the guideline clear with specific examples for each of the points. We also ask them to incorporate two new points to make the guideline complete," an SEC official said.
"We have asked them to add individual client's lending limit and specify clearly as to how much shares a merchant bank can purchase for its own portfolio," he said.
The association has been advised to submit the guideline again after making the necessary changes and incorporating the points suggested by the regulator, he added.
"We just have done our job. It is now up to the merchant banks whether they are going to add these points or not," the official said, adding other points in the guideline were up to mark and protected investors' interest.
The association prepared the guideline after the regulator declared last month that it would not fix the margin loan limit for investors any longer and would now allow merchant banks to set the cap on their own.
The association which represents 37 merchant banks now operating in Dhaka and Chittagong has been tasked with drafting a guideline based on which they can set margin loan limits.
The regulator has said it would not intervene in margin loan-related issues any more once the guideline is finalised and approved by the SEC.
"After the guideline is approved, the merchant bankers can revise margin loan ratio once in a quarter or six months," the official said.
In the guideline that the association has prepared, the banks have suggested setting the ratio at 1:2 -- in line with the existing limit fixed by the regulator last month.
A merchant banker said they had a threadbare discussion on the guideline with the SEC officials.
"The regulator has made some specific suggestions on single client's limit and other issues. Personally, I don't think it would be wise on our part to set such limit for an individual investor," the banker said.
"There are big and small investors. We should not impose any barrier for our clients who are big and confident," he added.
The Securities and Exchange Commission made the observation when the merchant bankers association submitted its guideline on margin loans to the regulator at its office in Motijheel.
SEC officials discussed the draft with the association members and sought some changes in the planned guideline, pointing out some gaps and recommending a few suggestions so as to make it investor-friendly.
"We told them to make the guideline clear with specific examples for each of the points. We also ask them to incorporate two new points to make the guideline complete," an SEC official said.
"We have asked them to add individual client's lending limit and specify clearly as to how much shares a merchant bank can purchase for its own portfolio," he said.
The association has been advised to submit the guideline again after making the necessary changes and incorporating the points suggested by the regulator, he added.
"We just have done our job. It is now up to the merchant banks whether they are going to add these points or not," the official said, adding other points in the guideline were up to mark and protected investors' interest.
The association prepared the guideline after the regulator declared last month that it would not fix the margin loan limit for investors any longer and would now allow merchant banks to set the cap on their own.
The association which represents 37 merchant banks now operating in Dhaka and Chittagong has been tasked with drafting a guideline based on which they can set margin loan limits.
The regulator has said it would not intervene in margin loan-related issues any more once the guideline is finalised and approved by the SEC.
"After the guideline is approved, the merchant bankers can revise margin loan ratio once in a quarter or six months," the official said.
In the guideline that the association has prepared, the banks have suggested setting the ratio at 1:2 -- in line with the existing limit fixed by the regulator last month.
A merchant banker said they had a threadbare discussion on the guideline with the SEC officials.
"The regulator has made some specific suggestions on single client's limit and other issues. Personally, I don't think it would be wise on our part to set such limit for an individual investor," the banker said.
"There are big and small investors. We should not impose any barrier for our clients who are big and confident," he added.
Monday, February 14
Govt seeks SEC's advice to overcome stock market crisis
FE Report (February 14, 2011)
The government has sought recommendations from the securities regulator -- Securities and Exchange Commission (SEC) -- to overcome the present crisis in the stock market, sources said.
The government has also asked the regulator to be more alert in handling the present situation of the market.
According to sources, the Prime Minister's (PM's) office sent a letter to the SEC last week through the finance ministry, seeking SEC's recommendations on eight points to overcome the present crisis of the stock market.
The SEC in its recommendation said that it would not intervene in liquidity-related issues. And the regulator has empowered merchant bankers and bourses to fix a guideline on margin loans.
The regulator said both the stock exchanges have been given responsibilities to take proper initiatives to control the abnormal prices of the listed companies. The SEC said both the stock exchanges have also been asked to maintain co-ordination between the prices and company fundamentals.
The SEC said presently the regulator is not giving its approval to any company to go public due to present market situation. That's why the regulator has deferred three IPO (initial public offering) proposals, which were submitted for going to public under fixed priced method.
It also said in its recommendation that the regulator would consider the pending IPO proposals only when the market would be able to overcome its crisis.
Recently, the government has postponed the book building method due to its loopholes in helping some companies to take out huge sums of money from the market through over pricing.
But the companies have no bar to go public under fixed price method.
In response to another point, the regulator said uniform software would be introduced in all trading houses to identify market manipulators. It also said the surveillance has also been strengthened to resist the vested quarters.
The regulator said it would help government offload additional shares of state-owned enterprises (SoEs).
The government has sought recommendations from the securities regulator -- Securities and Exchange Commission (SEC) -- to overcome the present crisis in the stock market, sources said.
The government has also asked the regulator to be more alert in handling the present situation of the market.
According to sources, the Prime Minister's (PM's) office sent a letter to the SEC last week through the finance ministry, seeking SEC's recommendations on eight points to overcome the present crisis of the stock market.
The SEC in its recommendation said that it would not intervene in liquidity-related issues. And the regulator has empowered merchant bankers and bourses to fix a guideline on margin loans.
The regulator said both the stock exchanges have been given responsibilities to take proper initiatives to control the abnormal prices of the listed companies. The SEC said both the stock exchanges have also been asked to maintain co-ordination between the prices and company fundamentals.
The SEC said presently the regulator is not giving its approval to any company to go public due to present market situation. That's why the regulator has deferred three IPO (initial public offering) proposals, which were submitted for going to public under fixed priced method.
It also said in its recommendation that the regulator would consider the pending IPO proposals only when the market would be able to overcome its crisis.
Recently, the government has postponed the book building method due to its loopholes in helping some companies to take out huge sums of money from the market through over pricing.
But the companies have no bar to go public under fixed price method.
In response to another point, the regulator said uniform software would be introduced in all trading houses to identify market manipulators. It also said the surveillance has also been strengthened to resist the vested quarters.
The regulator said it would help government offload additional shares of state-owned enterprises (SoEs).
Discretion yes, bandwagon mentality no
FE Report (February 14, 2011)
Much has been written on the recent stock market debacle in Bangladesh. The factors that came up in discussion as being responsible for this market crash are: (a) poor stock market regulation, (b) poor policy decisions by the regulators, and (c) manipulation. While these factors may be responsible for the market crash, a fundamental question remains: Did investors exercise their discretion before investing in stocks?
Investors are assumed to analyse stocks before they make their decisions regarding those stocks. In Bangladesh, most investors do not understand the ABC of accounting and finance. This is true of the millions of faceless investors in other countries. In developed countries, there are an army of securities' analysts who follow stocks. They act as information intermediaries. They collect information on stocks, do fundamental analyses, provide earnings forecasts and render investment advice. Fundamental analysis by these analysts makes the market efficient. It is these analysts on whom many faceless investors rely for investment advice. The Bangladesh stock market suffers from lack of adequate number of well-trained analysts. This situation should be remedied as soon as possible.
However, it is to be noted that relying on analysts is not always a panacea. Prior research documents that these analysts have their own incentives to give particular advice on particular stocks. Thus, there is no alternative to doing one's own analysis and exercising discretion. After all, it is the investors' money that is at stake. Thus, investors should invest some time and resources to learn the basics of fundamental analysis.
Interestingly, many sophisticated investors also did not do the proper homework this time. Rather they relied on the comments of the ministers regarding the state of the health of the stock market. They are now blaming the ministers. But it is not for the ministers to give the stock market a certificate of health. It is the job of the investors and analysts to assess the financial health of the listed companies. Instead of doing their own homework, they have in fact delegated the job of analysis to the ministers.
When optimism runs high in the stock market, it is fashionable to disregard the signals of accounting regarding the financial performance and condition of the companies on the ground that prices lead earnings, suggesting that prices are quicker than earnings in reflecting value-relevant information about the company and prices reflect a richer set of information than does accounting earnings. Further, it is argued that prices are forward-looking while accounting reflects only the past information. These arguments were given during the recent information technology (IT) bubble in the US market. Prices of many IT stocks skyrocketed despite the fact that those companies were in red. Eventually, the bubble burst.
What is missing in the above arguments is the value of accounting information as an alternative source of information. In other words, accounting acts as an alternative source of information that can be used to assess whether the market is out of line. Did the Bangladeshi investors use accounting reports to assess the reasonableness of the stock prices? My personal understanding is that most investors jumped on the bandwagon. This phenomenon is not new in our country. We saw many people, including educated ones, flocking to some financial institutions that gave huge returns overnights despite the fact that those institutions were not approved by relevant regulatory agencies for taking deposits. Thus, as I see it, part of the problem lies with the greed to make money overnight.
While the importance of strict monitoring and enforcement can hardly be overemphasized, it should be noted that the stock market crashed even in the best regulated market in the world. So the upshot is that there is no alternative to doing a bit analysis and exercising discretion.
Investors are assumed to analyse stocks before they make their decisions regarding those stocks. In Bangladesh, most investors do not understand the ABC of accounting and finance. This is true of the millions of faceless investors in other countries. In developed countries, there are an army of securities' analysts who follow stocks. They act as information intermediaries. They collect information on stocks, do fundamental analyses, provide earnings forecasts and render investment advice. Fundamental analysis by these analysts makes the market efficient. It is these analysts on whom many faceless investors rely for investment advice. The Bangladesh stock market suffers from lack of adequate number of well-trained analysts. This situation should be remedied as soon as possible.
However, it is to be noted that relying on analysts is not always a panacea. Prior research documents that these analysts have their own incentives to give particular advice on particular stocks. Thus, there is no alternative to doing one's own analysis and exercising discretion. After all, it is the investors' money that is at stake. Thus, investors should invest some time and resources to learn the basics of fundamental analysis.
Interestingly, many sophisticated investors also did not do the proper homework this time. Rather they relied on the comments of the ministers regarding the state of the health of the stock market. They are now blaming the ministers. But it is not for the ministers to give the stock market a certificate of health. It is the job of the investors and analysts to assess the financial health of the listed companies. Instead of doing their own homework, they have in fact delegated the job of analysis to the ministers.
When optimism runs high in the stock market, it is fashionable to disregard the signals of accounting regarding the financial performance and condition of the companies on the ground that prices lead earnings, suggesting that prices are quicker than earnings in reflecting value-relevant information about the company and prices reflect a richer set of information than does accounting earnings. Further, it is argued that prices are forward-looking while accounting reflects only the past information. These arguments were given during the recent information technology (IT) bubble in the US market. Prices of many IT stocks skyrocketed despite the fact that those companies were in red. Eventually, the bubble burst.
What is missing in the above arguments is the value of accounting information as an alternative source of information. In other words, accounting acts as an alternative source of information that can be used to assess whether the market is out of line. Did the Bangladeshi investors use accounting reports to assess the reasonableness of the stock prices? My personal understanding is that most investors jumped on the bandwagon. This phenomenon is not new in our country. We saw many people, including educated ones, flocking to some financial institutions that gave huge returns overnights despite the fact that those institutions were not approved by relevant regulatory agencies for taking deposits. Thus, as I see it, part of the problem lies with the greed to make money overnight.
While the importance of strict monitoring and enforcement can hardly be overemphasized, it should be noted that the stock market crashed even in the best regulated market in the world. So the upshot is that there is no alternative to doing a bit analysis and exercising discretion.
Bourses to sit with SEC to settle the issue
FE Report (February 14, 2011)
The leaders of the bourses have expressed their inability to devise a valuation method for margin loan due to limitations in the existing rules and regulations, officials said.
They said only the stock brokers can fix separate valuation to provide margin loans to their respective clients.
The leaders said that they would sit Monday with the officials of the Securities and Exchange Commission (SEC) to settle the issue.
Recently, the SEC asked the stock exchanges to devise a valuation method for providing margin loans to their clients. They were also asked to submit the structure of margin valuation to the SEC by February 10.
Fakhor Uddin Ali Ahmed, the president of Chittagong Stock Exchange (CSE), said in the absence of necessary provision in the existing laws of the stock exchanges, they are not in competent bodies to finanlise a valuation method for margin loan distribution.
"The existing rules and regulations of stock exchanges do not permit us to fix the valuation method," Mr. Ahmed told the FE.
"The sanctioning of margin loans depends on the relation between the lenders and their clients. That's why the stock brokers cannot devise the valuation method for margin loans," Ahmed said.
They said only the stock brokers can fix separate valuation to provide margin loans to their respective clients.
The leaders said that they would sit Monday with the officials of the Securities and Exchange Commission (SEC) to settle the issue.
Recently, the SEC asked the stock exchanges to devise a valuation method for providing margin loans to their clients. They were also asked to submit the structure of margin valuation to the SEC by February 10.
Fakhor Uddin Ali Ahmed, the president of Chittagong Stock Exchange (CSE), said in the absence of necessary provision in the existing laws of the stock exchanges, they are not in competent bodies to finanlise a valuation method for margin loan distribution.
"The existing rules and regulations of stock exchanges do not permit us to fix the valuation method," Mr. Ahmed told the FE.
"The sanctioning of margin loans depends on the relation between the lenders and their clients. That's why the stock brokers cannot devise the valuation method for margin loans," Ahmed said.
আইপিও অনুমোদন বন্ধ রাখার সিদ্ধান্ত নিয়েছে এসইসি
S News (February 14, 2011)
পুঁজিবাজারের বর্তমান নেতিবাচক পরিস্থিতির কারণে আপাতত নতুন কোম্পানির আইপিও অনুমোদন বন্ধ রাখার সিদ্ধান্ত নিয়েছে নিয়ন্ত্রক সংস্থা সিকিউরিটিজ এন্ড এক্সচেঞ্জ কমিশন (এসইসি)। প্রধানমন্ত্রীর কার্যালয় থেকে পুঁজিবাজারের বর্তমান পরিস্থিতি থেকে উত্তরণে করণীয় নির্ধারণে প্রয়োজনীয় সুপারিশমালায় এ সিদ্ধান্তের কথা জানিয়েছে এসইসি। প্রধানমন্ত্রীর কার্যালয় থেকে প্রেরিত চিঠিতে পুঁজিবাজার নিয়ন্ত্রণে অধিক সতর্কতার সাথে এসইসিকে কাজ করতে নির্দেশ প্রদান করা হয়েছে বলে সংশ্লিষ্ট সূত্র জানিয়েছে।
সূত্র জানায়, পুঁজিবাজারের সংকট কাটাতে অর্থ মন্ত্রণালয়ের মাধ্যমে এসইসির কাছে কয়েকটি বিষয়ে মতামত জানতে চেয়ে চিঠি পাঠায় প্রধানমন্ত্রীর কার্যালয়। এরমধ্যে তারল্য সংকট, অতি মূল্যায়ন রোধ, কারসাজিকারকদের শনাক্তকরণসহ বিভিন্ন বিষয় জানতে চাওয়া হয়। এসইসি তাদের সুপারিশমালায় জানিয়েছে যে, পুঁজিবাজারে বর্তমানে তারল্য সংকট চলছে। এ অবস্থায় নতুন আইপিও'র অনুমোদন দেয়া হলে তা তারল্য সংকট আরো প্রকট করে তুলবে। এ অবস্থায় আপাতত নতুন আইপিও'র অনুমোদন দেয়া বন্ধ রেখেছে এসইসি। ইতিমধ্যেই বুকবিল্ডিং পদ্ধতিতে তালিকাভুক্তি স্থগিত করা হয়েছে। তবে ফিঙ্ড প্রাইস পদ্ধতি চালু থাকলেও এ মুহূর্তে আইপিও'র আবেদনও বন্ধ রাখার সিদ্ধান্ত নেয়া হয়েছে। এরই ধারবাহিকতায় গত সপ্তাহে রংপুর ডেইরি এন্ড ফুড প্রডাক্টসের আইপিও ফেরত দেয়া হয়েছে। বাজার স্বাভাবিক হয়ে আসলে আইপিও অনুমোদন দেয়া শুরু হবে বলে এসইসি সুপারিশে জানিয়েছে। এছাড়া পুজিবাজারের বর্তমান অবস্থায় সরকারি শেয়ার ছাড়ার বিষয়টি নতুন করে চিন্তাভাবনা করা হচ্ছে। এ ব্যাপারে অর্থমন্ত্রীসহ সরকারের উচ্চ পর্যায়ে আলাপ আলোচনার ভিত্তিতে সরকারি শেয়ার বাজারে ছাড়ার বিষয়টি বিলম্বিত হতে পারে। কারণ, এখন বাজারে সরকারি শেয়ার ছাড়া হলে প্রকৃত মূল্য পাওয়ার ক্ষেত্রে অনিশ্চয়তা রয়েছে। ইতিমধ্যেই দর পড়ে যাওয়ায় রূপালী ব্যাংকের শেয়ার অফলোড প্রক্রিয়া সাময়িকভাবে বন্ধ করা হয়েছে।
পুঁজিবাজারে তারল্য হ্রাস বৃদ্ধির বিষয়ে এসইসি কোনো হস্তক্ষেপ করবে না বলে তাদের সুপারিশে বলা হয়। মার্জিন ঋণ বিষয়ে নীতিমালা প্রণয়ন করার জন্য দুই স্টক এক্সচেঞ্জ ও মার্চেন্ট ব্যাংকগুলোকে পৃথকভাবে দায়িত্ব দেয়া হয়েছে। তবে মার্জিন ঋণ ও আর্থিক সমন্বয় সুবিধা বন্ধের বিষয়ে এসইসি কোনো মতামত দেয়নি বলে জানা গেছে।
সুপারিশমালায় তালিকাভুক্ত কোম্পানির অতি মূল্যায়ন রোধ বিষয়ে এসইসি জানিয়েছে, কোম্পানির শেয়ারের দর ও মৌলভিত্তিতে সমন্বয়ের জন্য প্রয়োজনীয় ব্যবস্থা গ্রহণ করতে দুই স্টক এঙ্চেঞ্জকে ক্ষমতা দেয়া হয়েছে। চিঠিতে পুঁজিবাজারে কারসাজির সাথে জড়িতদের শনাক্তকরণে এসইসির ভূমিকা বিষয়ে জানতে চাইলে এসইসি জানিয়েছে যে, কারসাজির সাথে জড়িতদের শনাক্তকরণে ইউনিফর্ম সফটওয়্যার করবে। একই সাথে পুঁজিবাজারের সার্ভিলেন্স কার্যক্রমকে আরো জোরদার করার সিদ্ধান্ত নেয়া হয়েছে।
এছাড়া পুঁজিবাজারে শেয়ার লেনদেনে বিনিয়োগকারীদের অধিক সতর্ক করার জন্য নিয়মিতভাবে সচেতনতামূলক কার্যক্রম চালিয়ে যাওয়া হচ্ছে বলে এসইসি তাদের সুপারিশে জানিয়েছে।
সূত্র জানায়, পুঁজিবাজারের সংকট কাটাতে অর্থ মন্ত্রণালয়ের মাধ্যমে এসইসির কাছে কয়েকটি বিষয়ে মতামত জানতে চেয়ে চিঠি পাঠায় প্রধানমন্ত্রীর কার্যালয়। এরমধ্যে তারল্য সংকট, অতি মূল্যায়ন রোধ, কারসাজিকারকদের শনাক্তকরণসহ বিভিন্ন বিষয় জানতে চাওয়া হয়। এসইসি তাদের সুপারিশমালায় জানিয়েছে যে, পুঁজিবাজারে বর্তমানে তারল্য সংকট চলছে। এ অবস্থায় নতুন আইপিও'র অনুমোদন দেয়া হলে তা তারল্য সংকট আরো প্রকট করে তুলবে। এ অবস্থায় আপাতত নতুন আইপিও'র অনুমোদন দেয়া বন্ধ রেখেছে এসইসি। ইতিমধ্যেই বুকবিল্ডিং পদ্ধতিতে তালিকাভুক্তি স্থগিত করা হয়েছে। তবে ফিঙ্ড প্রাইস পদ্ধতি চালু থাকলেও এ মুহূর্তে আইপিও'র আবেদনও বন্ধ রাখার সিদ্ধান্ত নেয়া হয়েছে। এরই ধারবাহিকতায় গত সপ্তাহে রংপুর ডেইরি এন্ড ফুড প্রডাক্টসের আইপিও ফেরত দেয়া হয়েছে। বাজার স্বাভাবিক হয়ে আসলে আইপিও অনুমোদন দেয়া শুরু হবে বলে এসইসি সুপারিশে জানিয়েছে। এছাড়া পুজিবাজারের বর্তমান অবস্থায় সরকারি শেয়ার ছাড়ার বিষয়টি নতুন করে চিন্তাভাবনা করা হচ্ছে। এ ব্যাপারে অর্থমন্ত্রীসহ সরকারের উচ্চ পর্যায়ে আলাপ আলোচনার ভিত্তিতে সরকারি শেয়ার বাজারে ছাড়ার বিষয়টি বিলম্বিত হতে পারে। কারণ, এখন বাজারে সরকারি শেয়ার ছাড়া হলে প্রকৃত মূল্য পাওয়ার ক্ষেত্রে অনিশ্চয়তা রয়েছে। ইতিমধ্যেই দর পড়ে যাওয়ায় রূপালী ব্যাংকের শেয়ার অফলোড প্রক্রিয়া সাময়িকভাবে বন্ধ করা হয়েছে।
পুঁজিবাজারে তারল্য হ্রাস বৃদ্ধির বিষয়ে এসইসি কোনো হস্তক্ষেপ করবে না বলে তাদের সুপারিশে বলা হয়। মার্জিন ঋণ বিষয়ে নীতিমালা প্রণয়ন করার জন্য দুই স্টক এক্সচেঞ্জ ও মার্চেন্ট ব্যাংকগুলোকে পৃথকভাবে দায়িত্ব দেয়া হয়েছে। তবে মার্জিন ঋণ ও আর্থিক সমন্বয় সুবিধা বন্ধের বিষয়ে এসইসি কোনো মতামত দেয়নি বলে জানা গেছে।
সুপারিশমালায় তালিকাভুক্ত কোম্পানির অতি মূল্যায়ন রোধ বিষয়ে এসইসি জানিয়েছে, কোম্পানির শেয়ারের দর ও মৌলভিত্তিতে সমন্বয়ের জন্য প্রয়োজনীয় ব্যবস্থা গ্রহণ করতে দুই স্টক এঙ্চেঞ্জকে ক্ষমতা দেয়া হয়েছে। চিঠিতে পুঁজিবাজারে কারসাজির সাথে জড়িতদের শনাক্তকরণে এসইসির ভূমিকা বিষয়ে জানতে চাইলে এসইসি জানিয়েছে যে, কারসাজির সাথে জড়িতদের শনাক্তকরণে ইউনিফর্ম সফটওয়্যার করবে। একই সাথে পুঁজিবাজারের সার্ভিলেন্স কার্যক্রমকে আরো জোরদার করার সিদ্ধান্ত নেয়া হয়েছে।
এছাড়া পুঁজিবাজারে শেয়ার লেনদেনে বিনিয়োগকারীদের অধিক সতর্ক করার জন্য নিয়মিতভাবে সচেতনতামূলক কার্যক্রম চালিয়ে যাওয়া হচ্ছে বলে এসইসি তাদের সুপারিশে জানিয়েছে।
ওরিয়নসহ ৬ কোম্পানি অবৈধ প্লেসমেন্টে হাতিয়ে নিল ১৫৭২ কোটি টাকা
SNews (February 14, 2011)
প্রাইভেট প্লেসমেন্টের নামে পুঁজিবাজারে অনৈতিক বাণিজ্যের মাধ্যমে ১৫৭২ কোটি টাকা হাতিয়ে নিয়েছে ৬ কোম্পানি। পুঁজিবাজারে তালিকাভুক্তির প্রক্রিয়া শুরুর আগেই ওরিয়ন ফার্মাসিউটিক্যালস, জিএমজি এয়ালাইন্সসহ ৬টি কোম্পানি মূলধন সংগ্রহের নামে স্বল্পসংখ্যক শেয়ার প্লেসমেন্টে বিক্রির মাধ্যমে এ বিপুল পরিমাণ অর্থ হাতিয়ে নিয়েছে। দেশের সিকিউরিটিজ আইনে প্লেসমেন্ট বিষয়ে পূর্ণাঙ্গ আইন না থাকার সুযোগে স্টক এক্সচেঞ্জের বাইরে অবৈধ লেনদেন ব্যবস্থা গড়ে উঠেছে। তবে উচ্চহার প্রিমিয়ামে প্লেসমেন্ট শেয়ার বিক্রির মাধ্যমে কোম্পানিগুলো শ' শ' কোটি টাকা সংগ্রহ করলেও নির্দিষ্ট সময়ে কোম্পানি তালিকাভুক্ত না হওয়ায় প্লেসমেন্টে বরাদ্দ পাওয়া ব্যক্তিরা বিপাকে পড়েছেন। এদিকে প্লেসমেন্টে শ'শ' কোটি টাকা আটকে যাওয়ায় পুঁজিবাজারে বিদ্যমান তারল্য সংকট আরো প্রকট আকার ধারণ করেছে। অপরদিকে মূলধন বৃদ্ধির অনুমোদন এবং প্লেসমেন্ট বরাদ্দ সংক্রান্ত আইন না করে সিকিউরিটিজ এন্ড এক্সচেঞ্জ কমিশন (এসইসি) নিজেই অবৈধ প্লেসমেন্ট ব্যবসার সুযোগ করে দিয়েছে বলে অভিযোগ উঠেছে।
প্লেসমেন্টের কারণে পুঁজিবাজারের বাইরে শেয়ার লেনদেনের নতুন যে পদ্ধতি চালু হয়েছে তা সম্পূর্ণ বেআইনি। সম্প্রতি পুঁজিবাজারেও তালিকাভুক্ত হওয়ার আগেই অযৌক্তিক প্রিমিয়ামে প্লেসমেন্ট বাণিজ্যের মাধ্যমে বিপুল পরিমাণের অর্থ হাতিয়ে নিয়েছে বেশ কয়েকটি কোম্পানি। অতি মূল্যায়িত পুঁজিবাজারে শেয়ার সংকটের সুযোগ নিয়ে একাধিক দুর্বল কোম্পানি মিথ্যা আর্থিক প্রতিবেদনের মাধ্যমে শত শত কোটি টাকা অতিরিক্ত হাতিয়ে নিয়েছে। তালিকাভুক্তির প্রক্রিয়া শুরুর আগেই সম্প্রতি বড় ধরনের প্লেসমেন্ট বিক্রি করা কোম্পানিগুলো হচ্ছে-ওরিয়ন ফার্মা লিমিটেড, ইউনিক হোটেল এন্ড রিসোর্ট লিমিটেড, লংকা বাংলা সিকিউরিটিজ, জিএমজি এয়ারলাইন্স, এসটিএস হোল্ডিংস (এপোলো হাসপাতাল)। এছাড়া কেয়া কটন মিলসও প্লেসমেন্টে শেয়ার বিক্রি করেছে।
জানা যায়, উল্লিখিত কোম্পানিগুলোর মধ্যে সবচেয়ে বেশি পরিমাণ প্লেসমেন্ট বরাদ্দ দিয়েছে ওরিয়ন ফার্মা লিমিটেড। কোম্পানিটি তার পরিশোধিত মূলধন থেকে ৭০ কোটি টাকার শেয়ার প্লেসমেন্টের মাধ্যমে বিক্রি করেছে ৫২৫ কোটি টাকায়। প্লেসমেন্ট বরাদ্দের ক্ষেত্রে ওরিয়ন ফার্মা লিমিটেড ১০ টাকা অভিহিত মূল্যের প্রতিটি শেয়ার বিক্রি করেছে ৭৫ টাকায়। এ কোম্পানির ইস্যু ম্যানেজার হচ্ছে আইসিবি ক্যাপিটাল ম্যানেজমেন্ট লিমিটেড। ২০১০ সালের ৩১ আগস্ট এ কোম্পানির পরিশোধিত মূলধন ৮০ কোটি টাকা থেকে ১৩০ কোটি টাকায় এবং আইপিওর জন্য ৬ ডিসেম্বর ১৩০ কোটি টাকা থেকে ১৫৫ কোটি টাকায় উন্নীত করার অনুমতি দেয় এসইসি। মাত্র ৪ মাসের ব্যবধানে এসইসি এ কোম্পানির পরিশোধিত মূলধন ৭৫ কোটি টাকা বৃদ্ধির অনুমতি দিয়েছে, যা দিয়ে কোম্পানিটি অবৈধভাবে প্লেসমেন্টের মাধ্যমে ৫২৫ কোটি টাকা সংগ্রহ করেছে।
প্লেসমেন্ট বিক্রির ক্ষেত্রে এরপরের অবস্থান হচ্ছে ইউনিক হোটেল এন্ড রিসোর্ট লিমিটেডের। কোম্পানিটি পরিশোধিত মূলধন থেকে মাত্র ৩০ কোটি টাকার শেয়ার প্লেসমেন্টের মাধ্যমে বিক্রি করেছে ৪৮০ কোটি টাকায়। কোম্পানিটির ১০ টাকা অভিহিত মূল্যের প্রতিটি শেয়ার প্লেসমেন্টে বিক্রি হয়েছে ১৬০ টাকায়। একই প্রক্রিয়ায় জিএমজি এয়ারলাইন্স পরিশোধিত মূলধন থেকে ৬০ কোটি টাকার শেয়ার প্লেসমেন্টে বিক্রি করেছে ৩০০ কোটি টাকায়। প্লেসমেন্ট বিক্রির ক্ষেত্রে জিএমজি এয়ারলাইন্স ১০ টাকা অভিহিত মূল্যের শেয়ার বিক্রি করেছে ৫০ টাকায়। ইতিমধ্যেই এ কোম্পানির প্রসপেক্টাসে দেয়া আর্থিক প্রতিবেদন নিয়ে প্রশ্ন দেখা দিয়েছে।
অপরদিকে লংকা বাংলা সিকিউরিটিজ পরিশোধিত মূলধন থেকে ৫ কোটি টাকার শেয়ার প্লেসমেন্টে বিক্রি করেছে ১২৫ কোটি টাকায়। এ কোম্পানির ১০ টাকা অভিহিত মূল্যের প্রতিটি শেয়ার প্লেসমেন্টে বিক্রি হয়েছে ২৫০ টাকায়।
এদিকে প্লেসমেন্ট নিয়ে সবচেয়ে বেশি সন্দেহের সৃষ্টি করেছে এসটিএস হোল্ডিংস (এপোলো হাসপাতাল)। অন্যান্য কোম্পানি যেখানে প্লেসমেন্ট শেয়ার বরাদ্দে দশ থেকে পনের গুণ পর্যন্ত প্রিমিয়াম নিয়েছে সেখানে এ কোম্পানির প্লেসমেন্ট বিক্রি হয়েছে মাত্র দেড়গুণ দরে। এ কোম্পানিটি পরিশোধিত মূলধন থেকে ৮৬ কোটি ৯৭ লাখ টাকার শেয়ার প্লেসমেন্টের মাধ্যমে বিক্রি করেছে মাত্র ১৩০ কোটি টাকায়। এক্ষেত্রে কোম্পানিটি ১০ টাকা অভিহিত মূল্যের প্রতিটি শেয়ার বিক্রি করেছে মাত্র ১৫ টাকায়। তবে রোড শো'র জন্য প্রস্তুত করা কোম্পানির আর্থিক বিবরণীতে প্রতিটি শেয়ারের নির্দেশক মূল্য প্রস্তাব করা হয়েছে ১২৫ টাকায়। এ কোম্পানির শেয়ার প্রতি আয় হচ্ছে ১.৪৪ টাকা। ২০০৬ থেকে ২০০৮ সাল পর্যন্ত এ কোম্পানির শেয়ার প্রতি আয় ছিল ঋণাত্মক।
এছাড়া কেয়া কটন মিলস লিমিটেড তার পরিশোধিত মূলধন থেকে ৬ কোটি টাকার শেয়ার প্লেসমেন্টে বিক্রি করেছে ১২ কোটি টাকায়। প্লেসমেন্টের মাধ্যমে কেয়া কটন মিলের ১০ টাকা অভিহিত মূল্যের প্রতিটি শেয়ার বিক্রি করা হয়েছে ২০ টাকায়। যদিও কোম্পানিটি রোড শোতে প্রতিটি শেয়ারের নির্দেশক মূল্য প্রস্তাব করেছে ৬০ টাকায়। এছাড়া সামিট শিপিং লিমিটেড, কেওয়াইসিআর কয়েল ইন্ডাস্ট্রিজ, গোল্ডেন হারভেস্ট এগ্রো ইন্ডাস্ট্রিজ, ফারইস্ট নিটিং এন্ড ডায়িং ইন্ডাস্ট্রিজ, আনন্দ শিপইয়ার্ড, পিএইচপি ফ্লোট গ্লাস ইন্ডাস্ট্রিজ, নাভানা রিয়েল এস্টেটসহ বেশ কিছু কোম্পানি প্লেসমেন্টের মাধ্যমে শত শত কোটি টাকা অতিরিক্ত হাতিয়ে নিয়েছে।
জানা গেছে, অনেক আগেই প্লেসমেন্ট নিয়ে নীতিমালা প্রণয়নের সিদ্ধান্ত থাকলেও তা কার্যকর করেনি এসইসি। প্রাইভেট প্লেসমেন্ট নিয়ে ব্যাপক সমালোচনার মুখে গত বছরের এপ্রিল মাসে এ বিষয়ে একটি নীতিমালা প্রণয়নের সিদ্ধান্ত নিয়েছিল এসইসি। সেই সময় সিকিউরিটিজ এন্ড এক্সচেঞ্জ কমিশন (পাবলিক ইস্যু) বিধিমালা সংশোধনপূর্বক আইপিওর ক্ষেত্রে ১৫০ কোটি টাকার কম পরিশোধিত মূলধনের কোম্পানির জন্য প্রাইভেট প্লেসমেন্ট বন্ধ করার সিদ্ধান্ত নেয়া হয়। কিন্তু সেটি কার্যকর করা হয়নি। এমনকি কোম্পানি থেকে প্লেসমেন্ট বরাদ্দধারীদের তালিকা জমা দেয়া বাধ্যতামূলক করেনি এসইসি। তবে পুঁজিবাজারে কয়েক হাজার কোটি টাকার জমজমাট প্লেসমেন্ট ব্যবসার পর গত বছরের ২৮ ডিসেম্বর প্রাথমিকভাবে পাবলিক বা প্রাইভেট লিমিটেড কোম্পানির মূলধন সংগ্রহের জন্য বরাদ্দ করা শেয়ারের মালিকানা হস্তান্তরে এক বছরের নিষেধাজ্ঞা আরোপ করার সিদ্ধান্ত নেয় এসইসি। এছাড়াও পুঁজিবাজারে তালিকাভুক্তির আগে মূলধন সংগ্রহের জন্য উদ্যোক্তাদের বাইরে অন্য কারো কাছে শেয়ার বিক্রি করতে হলে কোম্পানির আর্থিক বিবরণীসহ প্রস্তাবনাপত্র (অফার ডকুমেন্ট) প্রকাশ বাধ্যতামূলক করার সিদ্ধান্ত নেয় এসইসি। তবে প্রাইভেট প্লেসমেন্টের মাধ্যমে মূলধন সংগ্রহে শৃঙ্খলা আনতে এ বিষয়ে একটি পূর্ণাঙ্গ নীতিমালা প্রণয়ন করার সিদ্ধান্ত নেয়া হলেও এখন পর্যন্ত কোনো নির্দেশনা জারি করেনি এসইসি। এ বিষয়ে এসইসির চেয়ারম্যান জিয়াউল হক খোন্দকারের সাথে টেলিফোনে একাধিকবার যোগাযোগ করা হলেও তিনি ফোন ধরেননি।
প্লেসমেন্টের কারণে পুঁজিবাজারের বাইরে শেয়ার লেনদেনের নতুন যে পদ্ধতি চালু হয়েছে তা সম্পূর্ণ বেআইনি। সম্প্রতি পুঁজিবাজারেও তালিকাভুক্ত হওয়ার আগেই অযৌক্তিক প্রিমিয়ামে প্লেসমেন্ট বাণিজ্যের মাধ্যমে বিপুল পরিমাণের অর্থ হাতিয়ে নিয়েছে বেশ কয়েকটি কোম্পানি। অতি মূল্যায়িত পুঁজিবাজারে শেয়ার সংকটের সুযোগ নিয়ে একাধিক দুর্বল কোম্পানি মিথ্যা আর্থিক প্রতিবেদনের মাধ্যমে শত শত কোটি টাকা অতিরিক্ত হাতিয়ে নিয়েছে। তালিকাভুক্তির প্রক্রিয়া শুরুর আগেই সম্প্রতি বড় ধরনের প্লেসমেন্ট বিক্রি করা কোম্পানিগুলো হচ্ছে-ওরিয়ন ফার্মা লিমিটেড, ইউনিক হোটেল এন্ড রিসোর্ট লিমিটেড, লংকা বাংলা সিকিউরিটিজ, জিএমজি এয়ারলাইন্স, এসটিএস হোল্ডিংস (এপোলো হাসপাতাল)। এছাড়া কেয়া কটন মিলসও প্লেসমেন্টে শেয়ার বিক্রি করেছে।
জানা যায়, উল্লিখিত কোম্পানিগুলোর মধ্যে সবচেয়ে বেশি পরিমাণ প্লেসমেন্ট বরাদ্দ দিয়েছে ওরিয়ন ফার্মা লিমিটেড। কোম্পানিটি তার পরিশোধিত মূলধন থেকে ৭০ কোটি টাকার শেয়ার প্লেসমেন্টের মাধ্যমে বিক্রি করেছে ৫২৫ কোটি টাকায়। প্লেসমেন্ট বরাদ্দের ক্ষেত্রে ওরিয়ন ফার্মা লিমিটেড ১০ টাকা অভিহিত মূল্যের প্রতিটি শেয়ার বিক্রি করেছে ৭৫ টাকায়। এ কোম্পানির ইস্যু ম্যানেজার হচ্ছে আইসিবি ক্যাপিটাল ম্যানেজমেন্ট লিমিটেড। ২০১০ সালের ৩১ আগস্ট এ কোম্পানির পরিশোধিত মূলধন ৮০ কোটি টাকা থেকে ১৩০ কোটি টাকায় এবং আইপিওর জন্য ৬ ডিসেম্বর ১৩০ কোটি টাকা থেকে ১৫৫ কোটি টাকায় উন্নীত করার অনুমতি দেয় এসইসি। মাত্র ৪ মাসের ব্যবধানে এসইসি এ কোম্পানির পরিশোধিত মূলধন ৭৫ কোটি টাকা বৃদ্ধির অনুমতি দিয়েছে, যা দিয়ে কোম্পানিটি অবৈধভাবে প্লেসমেন্টের মাধ্যমে ৫২৫ কোটি টাকা সংগ্রহ করেছে।
প্লেসমেন্ট বিক্রির ক্ষেত্রে এরপরের অবস্থান হচ্ছে ইউনিক হোটেল এন্ড রিসোর্ট লিমিটেডের। কোম্পানিটি পরিশোধিত মূলধন থেকে মাত্র ৩০ কোটি টাকার শেয়ার প্লেসমেন্টের মাধ্যমে বিক্রি করেছে ৪৮০ কোটি টাকায়। কোম্পানিটির ১০ টাকা অভিহিত মূল্যের প্রতিটি শেয়ার প্লেসমেন্টে বিক্রি হয়েছে ১৬০ টাকায়। একই প্রক্রিয়ায় জিএমজি এয়ারলাইন্স পরিশোধিত মূলধন থেকে ৬০ কোটি টাকার শেয়ার প্লেসমেন্টে বিক্রি করেছে ৩০০ কোটি টাকায়। প্লেসমেন্ট বিক্রির ক্ষেত্রে জিএমজি এয়ারলাইন্স ১০ টাকা অভিহিত মূল্যের শেয়ার বিক্রি করেছে ৫০ টাকায়। ইতিমধ্যেই এ কোম্পানির প্রসপেক্টাসে দেয়া আর্থিক প্রতিবেদন নিয়ে প্রশ্ন দেখা দিয়েছে।
অপরদিকে লংকা বাংলা সিকিউরিটিজ পরিশোধিত মূলধন থেকে ৫ কোটি টাকার শেয়ার প্লেসমেন্টে বিক্রি করেছে ১২৫ কোটি টাকায়। এ কোম্পানির ১০ টাকা অভিহিত মূল্যের প্রতিটি শেয়ার প্লেসমেন্টে বিক্রি হয়েছে ২৫০ টাকায়।
এদিকে প্লেসমেন্ট নিয়ে সবচেয়ে বেশি সন্দেহের সৃষ্টি করেছে এসটিএস হোল্ডিংস (এপোলো হাসপাতাল)। অন্যান্য কোম্পানি যেখানে প্লেসমেন্ট শেয়ার বরাদ্দে দশ থেকে পনের গুণ পর্যন্ত প্রিমিয়াম নিয়েছে সেখানে এ কোম্পানির প্লেসমেন্ট বিক্রি হয়েছে মাত্র দেড়গুণ দরে। এ কোম্পানিটি পরিশোধিত মূলধন থেকে ৮৬ কোটি ৯৭ লাখ টাকার শেয়ার প্লেসমেন্টের মাধ্যমে বিক্রি করেছে মাত্র ১৩০ কোটি টাকায়। এক্ষেত্রে কোম্পানিটি ১০ টাকা অভিহিত মূল্যের প্রতিটি শেয়ার বিক্রি করেছে মাত্র ১৫ টাকায়। তবে রোড শো'র জন্য প্রস্তুত করা কোম্পানির আর্থিক বিবরণীতে প্রতিটি শেয়ারের নির্দেশক মূল্য প্রস্তাব করা হয়েছে ১২৫ টাকায়। এ কোম্পানির শেয়ার প্রতি আয় হচ্ছে ১.৪৪ টাকা। ২০০৬ থেকে ২০০৮ সাল পর্যন্ত এ কোম্পানির শেয়ার প্রতি আয় ছিল ঋণাত্মক।
এছাড়া কেয়া কটন মিলস লিমিটেড তার পরিশোধিত মূলধন থেকে ৬ কোটি টাকার শেয়ার প্লেসমেন্টে বিক্রি করেছে ১২ কোটি টাকায়। প্লেসমেন্টের মাধ্যমে কেয়া কটন মিলের ১০ টাকা অভিহিত মূল্যের প্রতিটি শেয়ার বিক্রি করা হয়েছে ২০ টাকায়। যদিও কোম্পানিটি রোড শোতে প্রতিটি শেয়ারের নির্দেশক মূল্য প্রস্তাব করেছে ৬০ টাকায়। এছাড়া সামিট শিপিং লিমিটেড, কেওয়াইসিআর কয়েল ইন্ডাস্ট্রিজ, গোল্ডেন হারভেস্ট এগ্রো ইন্ডাস্ট্রিজ, ফারইস্ট নিটিং এন্ড ডায়িং ইন্ডাস্ট্রিজ, আনন্দ শিপইয়ার্ড, পিএইচপি ফ্লোট গ্লাস ইন্ডাস্ট্রিজ, নাভানা রিয়েল এস্টেটসহ বেশ কিছু কোম্পানি প্লেসমেন্টের মাধ্যমে শত শত কোটি টাকা অতিরিক্ত হাতিয়ে নিয়েছে।
জানা গেছে, অনেক আগেই প্লেসমেন্ট নিয়ে নীতিমালা প্রণয়নের সিদ্ধান্ত থাকলেও তা কার্যকর করেনি এসইসি। প্রাইভেট প্লেসমেন্ট নিয়ে ব্যাপক সমালোচনার মুখে গত বছরের এপ্রিল মাসে এ বিষয়ে একটি নীতিমালা প্রণয়নের সিদ্ধান্ত নিয়েছিল এসইসি। সেই সময় সিকিউরিটিজ এন্ড এক্সচেঞ্জ কমিশন (পাবলিক ইস্যু) বিধিমালা সংশোধনপূর্বক আইপিওর ক্ষেত্রে ১৫০ কোটি টাকার কম পরিশোধিত মূলধনের কোম্পানির জন্য প্রাইভেট প্লেসমেন্ট বন্ধ করার সিদ্ধান্ত নেয়া হয়। কিন্তু সেটি কার্যকর করা হয়নি। এমনকি কোম্পানি থেকে প্লেসমেন্ট বরাদ্দধারীদের তালিকা জমা দেয়া বাধ্যতামূলক করেনি এসইসি। তবে পুঁজিবাজারে কয়েক হাজার কোটি টাকার জমজমাট প্লেসমেন্ট ব্যবসার পর গত বছরের ২৮ ডিসেম্বর প্রাথমিকভাবে পাবলিক বা প্রাইভেট লিমিটেড কোম্পানির মূলধন সংগ্রহের জন্য বরাদ্দ করা শেয়ারের মালিকানা হস্তান্তরে এক বছরের নিষেধাজ্ঞা আরোপ করার সিদ্ধান্ত নেয় এসইসি। এছাড়াও পুঁজিবাজারে তালিকাভুক্তির আগে মূলধন সংগ্রহের জন্য উদ্যোক্তাদের বাইরে অন্য কারো কাছে শেয়ার বিক্রি করতে হলে কোম্পানির আর্থিক বিবরণীসহ প্রস্তাবনাপত্র (অফার ডকুমেন্ট) প্রকাশ বাধ্যতামূলক করার সিদ্ধান্ত নেয় এসইসি। তবে প্রাইভেট প্লেসমেন্টের মাধ্যমে মূলধন সংগ্রহে শৃঙ্খলা আনতে এ বিষয়ে একটি পূর্ণাঙ্গ নীতিমালা প্রণয়ন করার সিদ্ধান্ত নেয়া হলেও এখন পর্যন্ত কোনো নির্দেশনা জারি করেনি এসইসি। এ বিষয়ে এসইসির চেয়ারম্যান জিয়াউল হক খোন্দকারের সাথে টেলিফোনে একাধিকবার যোগাযোগ করা হলেও তিনি ফোন ধরেননি।
Tuesday, February 8
New investors rush to open BO accounts despite crash
FE Report (February 08, 2011)
New investors have kept pouring in the stock market despite a crash that has hurt tens of thousands of small investors severely, an official said Monday.
Since the stocks went on a free fall early December, some 250,000 beneficiary owner (BO) accounts have been opened.
Figures released by the Central Depository Bangladesh Limited, which keeps the electronic data of all share investors including individuals and companies, said 141,000 BO accounts were added alone in December.
An investor has to open a BO account to be able to trade in the share market and to apply for primary shares.
In January, the worst month in the stock market's recent history, at least 104,000 new BO accounts were opened, said CDBL chief executive M.A. Samad.
"The figures show new investors haven't turned their back on the capital market. The trend in new BO accounts opening remains strong and encouraging," he said.
He said in the first five days of February 10,000 BO accounts were opened and he expects the number to get momentum later in the month as an Initial Public Offering (IPO) of a new power company has invited subscription.
In 2010 a record 1.57 million BO accounts were opened as the booming market lured the country's elderly and female savers and hundreds of thousands of unemployed youngmen.
According to the latest count, the country now has 3,385,302 BO account holders including 144,850 non resident Bangladeshis and 8,607 companies.
The number has doubled in the past 15 months when the market rose more than 100 percent. In October, 2010 the CDBL added nearly 200,000 BO accounts -- a monthly record -- at the height of the share boom.
CDBL officials said the interest in the market could die down if the the number of new IPOs bottom out as the prospect for lucrative values looked dim following the crash.
The benchmark Dhaka Stock Exchange General (DGEN) Index shed more than 30 percent since it hit the historic high of 8918.51 on December 5 last year.
The smaller Chittagong Stock Exchange also embraced the same fate.
Thousands of small investors hit the streets in Dhaka and across the country, protesting the slump, which prompted the government to admit "mistakes" in handling the market. The government has set up a body to probe the fall.
CDBL officials said investors mainly follow IPO trail to decide whether to open a BO account or not.
"Typically investors rush to open BO accounts when they see declarations of new listings," he said.
At least 150,000 investors opened BO i.e. share accounts when the country's largest private company company, Grameenphone, invited subscription for its 141 million dollars IPO in October 2009.
Since the stocks went on a free fall early December, some 250,000 beneficiary owner (BO) accounts have been opened.
Figures released by the Central Depository Bangladesh Limited, which keeps the electronic data of all share investors including individuals and companies, said 141,000 BO accounts were added alone in December.
An investor has to open a BO account to be able to trade in the share market and to apply for primary shares.
In January, the worst month in the stock market's recent history, at least 104,000 new BO accounts were opened, said CDBL chief executive M.A. Samad.
"The figures show new investors haven't turned their back on the capital market. The trend in new BO accounts opening remains strong and encouraging," he said.
He said in the first five days of February 10,000 BO accounts were opened and he expects the number to get momentum later in the month as an Initial Public Offering (IPO) of a new power company has invited subscription.
In 2010 a record 1.57 million BO accounts were opened as the booming market lured the country's elderly and female savers and hundreds of thousands of unemployed youngmen.
According to the latest count, the country now has 3,385,302 BO account holders including 144,850 non resident Bangladeshis and 8,607 companies.
The number has doubled in the past 15 months when the market rose more than 100 percent. In October, 2010 the CDBL added nearly 200,000 BO accounts -- a monthly record -- at the height of the share boom.
CDBL officials said the interest in the market could die down if the the number of new IPOs bottom out as the prospect for lucrative values looked dim following the crash.
The benchmark Dhaka Stock Exchange General (DGEN) Index shed more than 30 percent since it hit the historic high of 8918.51 on December 5 last year.
The smaller Chittagong Stock Exchange also embraced the same fate.
Thousands of small investors hit the streets in Dhaka and across the country, protesting the slump, which prompted the government to admit "mistakes" in handling the market. The government has set up a body to probe the fall.
CDBL officials said investors mainly follow IPO trail to decide whether to open a BO account or not.
"Typically investors rush to open BO accounts when they see declarations of new listings," he said.
At least 150,000 investors opened BO i.e. share accounts when the country's largest private company company, Grameenphone, invited subscription for its 141 million dollars IPO in October 2009.
The fundamental principle of investors: In Greed we trust!
FE Report (February 08, 2011)
On the top of every US dollar note, one sentence is written, "In God We Trust" - the official motto of the United States adopted in 1956. Americans have permanently imprinted their Fundamental Principle of Life on their money. Probably it is because money is the key to life and living. The principle is true not only for Americans but perhaps everyone except atheists.
However, everything has changed with the advancement of time. People have become more knowledgeable and wise in these days. So has changed their thoughts, and even the Fundamental Principle of Life (!). Need a proof? From America to Bangladesh, have a look on the crises faced by the countries historically in the financial markets around the world. If it is difficult to apprehend, at least look at the just experienced crash in the stock market of Bangladesh and its last few years history of inorganic growth. You will find the testimony. All these crises, especially, the latest one of Bangladesh that has made many investors hero to zero reminds me the famous sentence written on the dollar notes. I am afraid, in this new world, our intelligent and more knowledgeable investors have brought a very small change in the principle as they follow today: "In Greed We Trust".
There was an old tea stall owner whom everyone called as "Dada" in front of the Bombay Stock Exchange in India selling tea on footpath for years. One fine morning, while going to the trading house, a well known big investor named Sachin came to the tea stall and said with a smile "Dada, make a cup of tea for me". While making the tea, Dada was asking, "How are you doing in the stock market? I have heard that it is doing great and I see many people are making high profit from it." The investor smiled but kept silent. Dada again asked, "Sachin Bhaia, you are a well known big investor. I have heard that what you think comes true in the stock market. I am planning to invest some of my savings in the stock market. What if I do it?" Sachin deeply thought for a while and said, "Oh sure, why not? Tell me when you are ready." Back from the tea stall, Sachin thought for the whole day. In the very next month, Sachin withdrew almost all of his investments from the market and deposited the money in his bank account. The following month, BSE saw its worst ever crash in the history of India. What did Sachin think really? Did he think about the crash that came true later? In fact, Sachin realized that when everyone is getting into the stock market especially the people like Dada, then it is no doubt that there is no other better time to get out of the market. Because, Sachin believed "too many crowd spoils the market". so has happened with us today breaking the hopes and dreams of millions.
The crash was inevitable since it became too high to sustain. The stock market in Bangladesh became a place for people from all classes ranging from a tea stall owner to an industrialist. And there lies the danger. According to one of my own research in 2006, over 70 percent of the investors are in micro class with an investment of less than BDT 0.1 million. There are more than 40 percent investors who even started their business with only Tk 5000 or 10000 saved from their hard earned money. A significant portion of these micro investors come from very marginal professions such grocery owners, private tutors, students, pension holders, etc. They have always thought the stock market as a Money Making Machine. They find people around them only making profits from the market. They even find many of their neighbours or friends making cars, flats, lands, and other assets doing business in the stock market. Making profit is not bad. Profit is the sole driving force for the market mechanism. Then what wrong in running for profit when everyone else around is making it really?
Yes, there is something wrong. These low income groups and the micro investors have always seen the rosy picture of the investors around them. The success stories or examples of making gains have been presented to them more than the dark side of it. And thus, these people have known or put a very little time to know about the other side of the game. The danger of high volatility of the market, imprudent decision making in managing investments, use of misleading information, lack of proper investment knowledge, and also the danger of a possible crash in the stock market have never been adequately or properly communicated to them. So what does this fact imply? Its lack of education and awareness that is absent in our small investors that has made them suffer so poorly.
Many small investors even did not put adequate attention to the risk of investing in this market and thus had day dreams of becoming rich overnight. They dreamt money, ate money, talked money, and directed themselves blindly to make money. They absolutely forgot or ignored the risk associated and at last, the result is crystal clear to all. I am sure this lesson from the poor suffering from the latest crash is going to be seriously taken by them. If the small investors are smart and are "real investors", they must learn about the danger associated with investment in stocks, and how one single such incident can ruin the life of thousands. So dear investors; please hold on your madness, think before you invest, consider whether you have the ability and willingness to absorb any downturn shocks. You must have to be ready to accept losses since you are ready to enjoy the gains.
One lesson is very important for our small investors. In nowhere in the world, in none of the stock markets, such a large number of small capital investors for investing in the stocks as our investors do. It is because, investing in stocks is very dangerous and hence not for small investors. The market itself is not for small investors like those who bring all of his life time savings, deposits from the pension or retirement fund, proceeds from selling lands, savings from their tiny income. In fact, to fulfill the investment need of this group of small investors the concept of Mutual Fund had born. It is the Mutual Fund which is exactly applicable and perfect opportunity for investment of one's hard earned money since mutual funds are designed to bring the risk down to the minimum level and ensure a fair return on investments. And most importantly, the beauty is, to ensure this minimum risk and fair return to the small investors, there are dedicated, expert and technically sound fund managers or portfolio managers to continuously research and manage the performance of these funds. Therefore, our small investors who today are ruining their luck by dreaming to be rich over time from stocks must rethink whether to continue or not. These investors should divert their funds to the mutual funds and take assistance of the financial experts rather than investing directly into the stocks and taking the risk of handling their investments by their own with no or insignificant knowledge on investment management.
Greed has gripped not only the small ones but also the big boys clubs. The big players in the market especially the institutional ones have played beyond the norms, overlooked human values and ethics, and overridden the professional code of conduct. There have been allegations of severe market manipulation by the big boys in the market. These institutions and individuals with unusually large amount of investment in the stocks have made the market dance up and down as per their requirements to breed big chunk of profit for them. These big boys are out of reach! For many years, they are playing inside, bubbling their deposit accounts and distorting the market but still they are the winners. Losers are our tiny investors. Interestingly, it is said that these big boys have their own clubs. It is also heard that there are a number of clubs. The clubs are for the wellbeing and welfare of the members within the clubs. They meet at places in off-trading hours, share information, make information (that comes out in broad daylight traditionally known as rumors), trade with listed company insiders, and even decide how they will move the market in the following days. How wonderful their community feeling is!
However, the institutional investors have played short of their adequate roles. Many of the institutional investors have so large amount of investment that they can influence the market easily and make huge profit from it. To me, it doesn't mean that they will always, every moment act for profit. I must admit they will do it but for the sake of the long term development of the market, they must not be guided by Greed like the small investors, and thus must not always heavily intervene in the market intentionally or unintentionally that creates undue influence over the market. It is because; heavy amount of trading in terms of volume and price by the unusually large institutional investors, may disproportionately influence the market and provide wrong signals to the mass investors which at time may bring dreadful situations if the intuitional investors take opposite position. Therefore, our institutional investors must act ethically and responsibly with professional codes of market conduct and restrain from being guided by Greedy profit making motive not thinking about what negative affect can take place on others. This will help the whole market to carry on a normal pace, and will help the mass investors not influenced and guided by wrong strategies.
Warren Buffet once said: "We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful." I am afraid; today we are exception from what this top financial guru said. When the investors in our market became greedy no one feared - neither regulators, nor institutional investors, not even most of the small investors. Because, there was probably no one left to be greedy. Everyone seemed to be flying on rosy wings with day dreams of becoming rich over night. Thus, many became greedy and some others perfectly exploited the formers' greedy behaviour, and have once again been able to take full hand of cash. For our innocent small investors, I must dedicate a very famous quote of Mahatma Gandhi - "Earth provides enough to satisfy every man's need, but not every man's greed". So please, please replace the word "God" instead of "Greed" in the sentence I started with, keep faith on yourself for a better future of your investment, and say, "In God we trust".
However, everything has changed with the advancement of time. People have become more knowledgeable and wise in these days. So has changed their thoughts, and even the Fundamental Principle of Life (!). Need a proof? From America to Bangladesh, have a look on the crises faced by the countries historically in the financial markets around the world. If it is difficult to apprehend, at least look at the just experienced crash in the stock market of Bangladesh and its last few years history of inorganic growth. You will find the testimony. All these crises, especially, the latest one of Bangladesh that has made many investors hero to zero reminds me the famous sentence written on the dollar notes. I am afraid, in this new world, our intelligent and more knowledgeable investors have brought a very small change in the principle as they follow today: "In Greed We Trust".
There was an old tea stall owner whom everyone called as "Dada" in front of the Bombay Stock Exchange in India selling tea on footpath for years. One fine morning, while going to the trading house, a well known big investor named Sachin came to the tea stall and said with a smile "Dada, make a cup of tea for me". While making the tea, Dada was asking, "How are you doing in the stock market? I have heard that it is doing great and I see many people are making high profit from it." The investor smiled but kept silent. Dada again asked, "Sachin Bhaia, you are a well known big investor. I have heard that what you think comes true in the stock market. I am planning to invest some of my savings in the stock market. What if I do it?" Sachin deeply thought for a while and said, "Oh sure, why not? Tell me when you are ready." Back from the tea stall, Sachin thought for the whole day. In the very next month, Sachin withdrew almost all of his investments from the market and deposited the money in his bank account. The following month, BSE saw its worst ever crash in the history of India. What did Sachin think really? Did he think about the crash that came true later? In fact, Sachin realized that when everyone is getting into the stock market especially the people like Dada, then it is no doubt that there is no other better time to get out of the market. Because, Sachin believed "too many crowd spoils the market". so has happened with us today breaking the hopes and dreams of millions.
The crash was inevitable since it became too high to sustain. The stock market in Bangladesh became a place for people from all classes ranging from a tea stall owner to an industrialist. And there lies the danger. According to one of my own research in 2006, over 70 percent of the investors are in micro class with an investment of less than BDT 0.1 million. There are more than 40 percent investors who even started their business with only Tk 5000 or 10000 saved from their hard earned money. A significant portion of these micro investors come from very marginal professions such grocery owners, private tutors, students, pension holders, etc. They have always thought the stock market as a Money Making Machine. They find people around them only making profits from the market. They even find many of their neighbours or friends making cars, flats, lands, and other assets doing business in the stock market. Making profit is not bad. Profit is the sole driving force for the market mechanism. Then what wrong in running for profit when everyone else around is making it really?
Yes, there is something wrong. These low income groups and the micro investors have always seen the rosy picture of the investors around them. The success stories or examples of making gains have been presented to them more than the dark side of it. And thus, these people have known or put a very little time to know about the other side of the game. The danger of high volatility of the market, imprudent decision making in managing investments, use of misleading information, lack of proper investment knowledge, and also the danger of a possible crash in the stock market have never been adequately or properly communicated to them. So what does this fact imply? Its lack of education and awareness that is absent in our small investors that has made them suffer so poorly.
Many small investors even did not put adequate attention to the risk of investing in this market and thus had day dreams of becoming rich overnight. They dreamt money, ate money, talked money, and directed themselves blindly to make money. They absolutely forgot or ignored the risk associated and at last, the result is crystal clear to all. I am sure this lesson from the poor suffering from the latest crash is going to be seriously taken by them. If the small investors are smart and are "real investors", they must learn about the danger associated with investment in stocks, and how one single such incident can ruin the life of thousands. So dear investors; please hold on your madness, think before you invest, consider whether you have the ability and willingness to absorb any downturn shocks. You must have to be ready to accept losses since you are ready to enjoy the gains.
One lesson is very important for our small investors. In nowhere in the world, in none of the stock markets, such a large number of small capital investors for investing in the stocks as our investors do. It is because, investing in stocks is very dangerous and hence not for small investors. The market itself is not for small investors like those who bring all of his life time savings, deposits from the pension or retirement fund, proceeds from selling lands, savings from their tiny income. In fact, to fulfill the investment need of this group of small investors the concept of Mutual Fund had born. It is the Mutual Fund which is exactly applicable and perfect opportunity for investment of one's hard earned money since mutual funds are designed to bring the risk down to the minimum level and ensure a fair return on investments. And most importantly, the beauty is, to ensure this minimum risk and fair return to the small investors, there are dedicated, expert and technically sound fund managers or portfolio managers to continuously research and manage the performance of these funds. Therefore, our small investors who today are ruining their luck by dreaming to be rich over time from stocks must rethink whether to continue or not. These investors should divert their funds to the mutual funds and take assistance of the financial experts rather than investing directly into the stocks and taking the risk of handling their investments by their own with no or insignificant knowledge on investment management.
Greed has gripped not only the small ones but also the big boys clubs. The big players in the market especially the institutional ones have played beyond the norms, overlooked human values and ethics, and overridden the professional code of conduct. There have been allegations of severe market manipulation by the big boys in the market. These institutions and individuals with unusually large amount of investment in the stocks have made the market dance up and down as per their requirements to breed big chunk of profit for them. These big boys are out of reach! For many years, they are playing inside, bubbling their deposit accounts and distorting the market but still they are the winners. Losers are our tiny investors. Interestingly, it is said that these big boys have their own clubs. It is also heard that there are a number of clubs. The clubs are for the wellbeing and welfare of the members within the clubs. They meet at places in off-trading hours, share information, make information (that comes out in broad daylight traditionally known as rumors), trade with listed company insiders, and even decide how they will move the market in the following days. How wonderful their community feeling is!
However, the institutional investors have played short of their adequate roles. Many of the institutional investors have so large amount of investment that they can influence the market easily and make huge profit from it. To me, it doesn't mean that they will always, every moment act for profit. I must admit they will do it but for the sake of the long term development of the market, they must not be guided by Greed like the small investors, and thus must not always heavily intervene in the market intentionally or unintentionally that creates undue influence over the market. It is because; heavy amount of trading in terms of volume and price by the unusually large institutional investors, may disproportionately influence the market and provide wrong signals to the mass investors which at time may bring dreadful situations if the intuitional investors take opposite position. Therefore, our institutional investors must act ethically and responsibly with professional codes of market conduct and restrain from being guided by Greedy profit making motive not thinking about what negative affect can take place on others. This will help the whole market to carry on a normal pace, and will help the mass investors not influenced and guided by wrong strategies.
Warren Buffet once said: "We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful." I am afraid; today we are exception from what this top financial guru said. When the investors in our market became greedy no one feared - neither regulators, nor institutional investors, not even most of the small investors. Because, there was probably no one left to be greedy. Everyone seemed to be flying on rosy wings with day dreams of becoming rich over night. Thus, many became greedy and some others perfectly exploited the formers' greedy behaviour, and have once again been able to take full hand of cash. For our innocent small investors, I must dedicate a very famous quote of Mahatma Gandhi - "Earth provides enough to satisfy every man's need, but not every man's greed". So please, please replace the word "God" instead of "Greed" in the sentence I started with, keep faith on yourself for a better future of your investment, and say, "In God we trust".
Thursday, February 3
Taka depreciates by 2.5 pc in last one month
FE Report (February 03, 2011)
Bangladesh Taka (BDT) depreciated by over 2.50 per cent against the US dollar in the last one month at customer level, which also might contribute to rise in general prices further, treasury officials said.
The US dollar was quoted at Tk 73.0992 Wednesday for bills for collection (BC) selling for opening letters of credit (LC) against imports. It was at Tk 71.2763 on December 30 last, according to the Bangladesh Foreign Exchange Dealers Association (BAFEDA) statistics.
The third currency, popularly known as cross currencies, practices increased recently that also pushed the rate of greenback in the country's foreign exchange market.
The US dollar was quoted at Tk 71.15 Wednesday in the inter-bank foreign exchange market while the rate of greenback reached between Tk 73.25 and Tk 73.30 through third currieries route, they added.
"Most of the banks now prefer to deal with Euro or Great Britain Pound (GBP) instead of US dollar for making higher profit from the transactions," a treasury official of a leading private commercial bank told the FE.
He also said the banks are making their cross currencies deals in line with the existing core risk management guidelines, introduced by the central bank earlier.
The central bank earlier identified six core risk areas in the country's banking sector.
The risk factors are credit, asset and liability, foreign exchange, information technology, internal control and compliance, and money laundering.
Major foreign currencies like US dollar, Euro, Pound Sterling and Japanese Yen are frequently being transacted in the inter-bank foreign exchange market, they added.
"The supply of greenback in the market declined since December last due mainly to higher import payments, particularly for fuel oils, food grains and power plant equipment," another treasury official said.
The country's imports grew by nearly 40 per cent during the first half of the current fiscal over that of the corresponding period of the last fiscal.
LCs against imports worth US$ 15.001 billion were settled during July-December period of fiscal 2010-11 compared to $10.717 billion in the corresponding period of fiscal 2009-10.
Pressure on foreign exchange reserve has increased gradually due mainly to higher import payments, the central bank officials said, adding that the country's foreign exchange reserve came down to US$10.381 billion Wednesday from $10.440 billion of the previous day.
"Some banks are making payment against their import bills using their customers' deposited US dollar," another treasury official said, adding there is no alternative way for the banks right now to settling such import obligations.
Most of the banks are facing deficiency in their net foreign exchange position indicating short supply of the greenback in the market, a senior official of the Bangladesh Bank (BB) said.
"We've asked eight commercial banks to maintain their net open position (NOP) limit of the foreign exchange properly for avoiding any risk," the BB official told the FE, adding the banks have already exceeded their NOP limit, fixed by the central bank earlier.
The central bank will take measures to discourage imports of less essential items aiming to minimise mismatch between demand and supply of the greenback in the market.
"We'll take effective measures in this connection in line with our new monetary policy," an executive director of the BB told the FE, adding that the central bank would give necessary instructions to the banks for implementation of the monetary policy.
On Sunday last, the central bank unveiled its half-yearly monetary policy that aimed at keeping inflation rate at around 7.0 per cent by the end of this fiscal through discouraging credit flow to unproductive sectors.
The US dollar was quoted at Tk 73.0992 Wednesday for bills for collection (BC) selling for opening letters of credit (LC) against imports. It was at Tk 71.2763 on December 30 last, according to the Bangladesh Foreign Exchange Dealers Association (BAFEDA) statistics.
The third currency, popularly known as cross currencies, practices increased recently that also pushed the rate of greenback in the country's foreign exchange market.
The US dollar was quoted at Tk 71.15 Wednesday in the inter-bank foreign exchange market while the rate of greenback reached between Tk 73.25 and Tk 73.30 through third currieries route, they added.
"Most of the banks now prefer to deal with Euro or Great Britain Pound (GBP) instead of US dollar for making higher profit from the transactions," a treasury official of a leading private commercial bank told the FE.
He also said the banks are making their cross currencies deals in line with the existing core risk management guidelines, introduced by the central bank earlier.
The central bank earlier identified six core risk areas in the country's banking sector.
The risk factors are credit, asset and liability, foreign exchange, information technology, internal control and compliance, and money laundering.
Major foreign currencies like US dollar, Euro, Pound Sterling and Japanese Yen are frequently being transacted in the inter-bank foreign exchange market, they added.
"The supply of greenback in the market declined since December last due mainly to higher import payments, particularly for fuel oils, food grains and power plant equipment," another treasury official said.
The country's imports grew by nearly 40 per cent during the first half of the current fiscal over that of the corresponding period of the last fiscal.
LCs against imports worth US$ 15.001 billion were settled during July-December period of fiscal 2010-11 compared to $10.717 billion in the corresponding period of fiscal 2009-10.
Pressure on foreign exchange reserve has increased gradually due mainly to higher import payments, the central bank officials said, adding that the country's foreign exchange reserve came down to US$10.381 billion Wednesday from $10.440 billion of the previous day.
"Some banks are making payment against their import bills using their customers' deposited US dollar," another treasury official said, adding there is no alternative way for the banks right now to settling such import obligations.
Most of the banks are facing deficiency in their net foreign exchange position indicating short supply of the greenback in the market, a senior official of the Bangladesh Bank (BB) said.
"We've asked eight commercial banks to maintain their net open position (NOP) limit of the foreign exchange properly for avoiding any risk," the BB official told the FE, adding the banks have already exceeded their NOP limit, fixed by the central bank earlier.
The central bank will take measures to discourage imports of less essential items aiming to minimise mismatch between demand and supply of the greenback in the market.
"We'll take effective measures in this connection in line with our new monetary policy," an executive director of the BB told the FE, adding that the central bank would give necessary instructions to the banks for implementation of the monetary policy.
On Sunday last, the central bank unveiled its half-yearly monetary policy that aimed at keeping inflation rate at around 7.0 per cent by the end of this fiscal through discouraging credit flow to unproductive sectors.
SEC halts change of stocks’ face value
FE Report (February 03, 2011)
Listed issues will no more be allowed to change their face value, officials said.
The Securities and Exchange Commission (SEC) Wednesday kept in abeyance its notification regarding changing of face value of shares.
The move comes in response to a recent proposal from the Dhaka Stock Exchange (DSE). A number of companies earlier made their shares overvalued by changing their face value.
SEC Chairman Ziaul Haque Khondker told the FE that the notification has been postponed, and no company would be allowed to complete the formalities of changing their face value.
"The fresh order will remain effective until further order," the chairman said.
The SEC spokesman and executive director Mohammad Saifur Rahman said the regulator Wednesday sent letters to the chief executive officers of both the stock exchanges to make the latest order effective.
Earlier, the SEC issued a notification on May 10, 2010, saying that the commission would take initiatives to approve the face value split of shares of the companies, which would complete the required formalities.
By this time, the SEC gave consent to about 63 companies to split the face value of their shares following a government decision, taken on November 5, 2010.
However, the prices of those companies' shares went up abnormally following the declaration of face value split, taken at their extraordinary general meeting (EGM).
Even, the share prices of the companies, which might split face value in near future, also increased unusually. Presently, some companies are going to arrange EGM to split the face value of their shares.
Experts have been criticising this mechanism from the very beginning of its introduction, as a group of people made huge profits using it, though nothing was added to company fundamentals.
Recently, when the stock market experienced a massive plunge, the retail investors urged the authorities concerned either to stop the splitting mechanism or to take initiatives, so that all of the remaining companies can split the face value of their shares at a time.
Later, the SEC urged the government to give its consent for splitting the face value of the shares of the remaining companies at a time.
The regulator's demand was placed at a meeting held recently at the sate guest house Padma, where all the key stakeholders attended. But Finance Minister A M A Muhith refused the proposal.
Finally the SEC postponed its earlier notification Wednesday in line with the government's decision, and from now on no company will be allowed to split the face value of their shares until further order.
Listed issues will no more be allowed to change their face value, officials said.
The Securities and Exchange Commission (SEC) Wednesday kept in abeyance its notification regarding changing of face value of shares.
The move comes in response to a recent proposal from the Dhaka Stock Exchange (DSE). A number of companies earlier made their shares overvalued by changing their face value.
SEC Chairman Ziaul Haque Khondker told the FE that the notification has been postponed, and no company would be allowed to complete the formalities of changing their face value.
"The fresh order will remain effective until further order," the chairman said.
The SEC spokesman and executive director Mohammad Saifur Rahman said the regulator Wednesday sent letters to the chief executive officers of both the stock exchanges to make the latest order effective.
Earlier, the SEC issued a notification on May 10, 2010, saying that the commission would take initiatives to approve the face value split of shares of the companies, which would complete the required formalities.
By this time, the SEC gave consent to about 63 companies to split the face value of their shares following a government decision, taken on November 5, 2010.
However, the prices of those companies' shares went up abnormally following the declaration of face value split, taken at their extraordinary general meeting (EGM).
Even, the share prices of the companies, which might split face value in near future, also increased unusually. Presently, some companies are going to arrange EGM to split the face value of their shares.
Experts have been criticising this mechanism from the very beginning of its introduction, as a group of people made huge profits using it, though nothing was added to company fundamentals.
Recently, when the stock market experienced a massive plunge, the retail investors urged the authorities concerned either to stop the splitting mechanism or to take initiatives, so that all of the remaining companies can split the face value of their shares at a time.
Later, the SEC urged the government to give its consent for splitting the face value of the shares of the remaining companies at a time.
The regulator's demand was placed at a meeting held recently at the sate guest house Padma, where all the key stakeholders attended. But Finance Minister A M A Muhith refused the proposal.
Finally the SEC postponed its earlier notification Wednesday in line with the government's decision, and from now on no company will be allowed to split the face value of their shares until further order.
Wednesday, February 2
ICB to issue 3 rights against 4 shares
FE Report (February 02, 2011)
Investment Corporation of Bangladesh (ICB) has decided to increase its liquidity flow through issuing three right shares against four existing shares, official sources said.
Intervening the capital market with injecting available fund is the root cause for the issuance of the proposed right shares, a high ICB official said.
The value of each right share has been fixed at Tk 1,000 with a premium of Tk 900.
"Increasing the supply of good shares and enhancing the financial capacity of ICB to support the capital market in need are the major reasons to issue the right shares," a general manager of the Corporation told FE on Tuesday.
"Extra fund of about Tk 20 billion will be in the account of ICB after getting the subscription fee against the right shares," he added.
Presently, government owns 27 per cent stake of ICB, 70.19 per cent by institutions and the remaining 2.81 per cent is held by public.
The authorized capital of ICB is Tk5.0 billion, while the paid-up capital is Tk 2.5 billion.
ICB officials said they are now facing dearth of liquid fund to intervene in the market. Recently, Bangladesh Bank has lent Tk 4.0 billion to ICB to intervene in the market.
The ICB sent the proposal to Ministry of Finance (MoF) last week for approval.
Officials in the MoF said they are aware of the fund shortage of ICB.
They said MoF is in favour of strengthening the financial capacity of the Corporation as the ministry has to ask ICB often to buy shares from the market when volatility arises.
Investment Corporation of Bangladesh (ICB) has decided to increase its liquidity flow through issuing three right shares against four existing shares, official sources said.
Intervening the capital market with injecting available fund is the root cause for the issuance of the proposed right shares, a high ICB official said.
The value of each right share has been fixed at Tk 1,000 with a premium of Tk 900.
"Increasing the supply of good shares and enhancing the financial capacity of ICB to support the capital market in need are the major reasons to issue the right shares," a general manager of the Corporation told FE on Tuesday.
"Extra fund of about Tk 20 billion will be in the account of ICB after getting the subscription fee against the right shares," he added.
Presently, government owns 27 per cent stake of ICB, 70.19 per cent by institutions and the remaining 2.81 per cent is held by public.
The authorized capital of ICB is Tk5.0 billion, while the paid-up capital is Tk 2.5 billion.
ICB officials said they are now facing dearth of liquid fund to intervene in the market. Recently, Bangladesh Bank has lent Tk 4.0 billion to ICB to intervene in the market.
The ICB sent the proposal to Ministry of Finance (MoF) last week for approval.
Officials in the MoF said they are aware of the fund shortage of ICB.
They said MoF is in favour of strengthening the financial capacity of the Corporation as the ministry has to ask ICB often to buy shares from the market when volatility arises.
SEC’s hands-off stance on margin loan
FE Report (February 02, 2011)
The securities regulator Tuesday allowed merchant banks and brokerages to fix the margin loan limits for their clients, scrapping a decades-long policy that drew sharp criticism during the recent stock crash, officials said.
The Securities and Exchange Commission (SEC) also empowered the country's two bourses to halt abnormal trading of any companies and take actions against rogue traders.
The regulator announced the decision at its office in the capital after meeting with the officials of the country's bourses and leaders of the merchant bank association.
In the wake of a crash in the bourses, Finance minister AMA Muhith last month declared that a move was underway to scrap SEC's decades-long policy of fixing margin loans for the merchant banks and brokerages.
SEC spokesman Mohammad Saifur Rahman said the regulator has now decided to ditch the policy in an effort to bring stability in the market.
"From now on the regulator will not fix the limit of margin loans. The loan providers such as merchant banks and brokerages can fix the limits in line with a guideline," Mr. Rahman told reporters.
He said the merchant bank association has been told to prepare a guideline by February 10 and get it approved by the regulator. They can start providing margin loans to clients once the guideline is okayed.
"The loan providers are allowed to change the margin loan limit two times a year. The revised loan ratio will come into effect on the first working day of January and July respectively," he said.
The decision is seen as a victory for the merchant banks and their thousands of clients who have earlier accused the SEC of creating volatility in the capital market by frequently changing the margin limits.
SEC officials said in preparing the guideline the merchant bankers will take into account the evaluation method of securities stored in clients' accounts, highest limit of loans, rules of margin call, trigger sell and the existing securities laws.
Experts welcomed the regulator's decision but they stressed a clear guideline to avoid irregularities in extending margin loans to investors.
President of Chittagong Stock Exchange Fakhor Uddin Ali Ahmed greeted the decision saying in other countries the amount of margin loans depends on the relation between the lenders and their clients.
"It's a good move. It is going to help the investors. Fixing the margin loan limits is not a job of the regulator," he said after attending the meeting at the SEC.
Former SEC Chairman Mirza AB Azizul Islam said the single borrower's exposure limit must be mentioned in the guideline.
"Otherwise, some lenders may misuse the provision. And big clients will benefit at the expense of smaller investors. The authorities must plug holes in the guideline so that it is not manipulated," he said.
He also said the regulator should be prepared to control any abnormal situation by exercising its power.
The SEC said it will hold the merchant banks and brokerage firms accountable if they misuse the facility and violate the guideline.
The merchant bankers and brokerage firms have also been ordered to submit the statement of margin loans provided to their clients to the SEC every month.
"The DSE and CSE will submit the loan statements of their members and merchant bankers will individually submit their statements to the SEC," Rahman said.
Presently, the merchant bankers and brokerage firms are allowed to provide margin loans at a ratio 1:2. The SEC regulator revised the loan ratio twelve times during the past two years.
The SEC said the regulator has empowered both the stock exchanges to take necessary measures against unusual trade or demote a company to the over-the-counter (OTC) market from the main board.
"From now on both the stock exchanges can halt unusual trade of any listed company," Rahman said.
But after taking action against abnormal activities, the stock exchanges will have to inform the SEC regarding the measures, he said.
Rahman said the decision was taken following advice from different stakeholders so that self-regulated organisations (SROs), i.e. the bourses, can play effective roles in controlling unusual trading in the stock market.
DSE President Shakil Rizvi who also attended the meeting said the move would strengthen the bourses and allow them to sort out irregularities quickly.
SEC members---Muhammad Yasin Ali and Mohammad Anisuzzaman, Bangladesh Merchant Bankers's Association President Sheikh Murtoza Ahmed and leaders of b the stock exchanges were present in the meeting, chaired by SEC chairman Ziaul Hoque Khondker.
The securities regulator Tuesday allowed merchant banks and brokerages to fix the margin loan limits for their clients, scrapping a decades-long policy that drew sharp criticism during the recent stock crash, officials said.
The Securities and Exchange Commission (SEC) also empowered the country's two bourses to halt abnormal trading of any companies and take actions against rogue traders.
The regulator announced the decision at its office in the capital after meeting with the officials of the country's bourses and leaders of the merchant bank association.
In the wake of a crash in the bourses, Finance minister AMA Muhith last month declared that a move was underway to scrap SEC's decades-long policy of fixing margin loans for the merchant banks and brokerages.
SEC spokesman Mohammad Saifur Rahman said the regulator has now decided to ditch the policy in an effort to bring stability in the market.
"From now on the regulator will not fix the limit of margin loans. The loan providers such as merchant banks and brokerages can fix the limits in line with a guideline," Mr. Rahman told reporters.
He said the merchant bank association has been told to prepare a guideline by February 10 and get it approved by the regulator. They can start providing margin loans to clients once the guideline is okayed.
"The loan providers are allowed to change the margin loan limit two times a year. The revised loan ratio will come into effect on the first working day of January and July respectively," he said.
The decision is seen as a victory for the merchant banks and their thousands of clients who have earlier accused the SEC of creating volatility in the capital market by frequently changing the margin limits.
SEC officials said in preparing the guideline the merchant bankers will take into account the evaluation method of securities stored in clients' accounts, highest limit of loans, rules of margin call, trigger sell and the existing securities laws.
Experts welcomed the regulator's decision but they stressed a clear guideline to avoid irregularities in extending margin loans to investors.
President of Chittagong Stock Exchange Fakhor Uddin Ali Ahmed greeted the decision saying in other countries the amount of margin loans depends on the relation between the lenders and their clients.
"It's a good move. It is going to help the investors. Fixing the margin loan limits is not a job of the regulator," he said after attending the meeting at the SEC.
Former SEC Chairman Mirza AB Azizul Islam said the single borrower's exposure limit must be mentioned in the guideline.
"Otherwise, some lenders may misuse the provision. And big clients will benefit at the expense of smaller investors. The authorities must plug holes in the guideline so that it is not manipulated," he said.
He also said the regulator should be prepared to control any abnormal situation by exercising its power.
The SEC said it will hold the merchant banks and brokerage firms accountable if they misuse the facility and violate the guideline.
The merchant bankers and brokerage firms have also been ordered to submit the statement of margin loans provided to their clients to the SEC every month.
"The DSE and CSE will submit the loan statements of their members and merchant bankers will individually submit their statements to the SEC," Rahman said.
Presently, the merchant bankers and brokerage firms are allowed to provide margin loans at a ratio 1:2. The SEC regulator revised the loan ratio twelve times during the past two years.
The SEC said the regulator has empowered both the stock exchanges to take necessary measures against unusual trade or demote a company to the over-the-counter (OTC) market from the main board.
"From now on both the stock exchanges can halt unusual trade of any listed company," Rahman said.
But after taking action against abnormal activities, the stock exchanges will have to inform the SEC regarding the measures, he said.
Rahman said the decision was taken following advice from different stakeholders so that self-regulated organisations (SROs), i.e. the bourses, can play effective roles in controlling unusual trading in the stock market.
DSE President Shakil Rizvi who also attended the meeting said the move would strengthen the bourses and allow them to sort out irregularities quickly.
SEC members---Muhammad Yasin Ali and Mohammad Anisuzzaman, Bangladesh Merchant Bankers's Association President Sheikh Murtoza Ahmed and leaders of b the stock exchanges were present in the meeting, chaired by SEC chairman Ziaul Hoque Khondker.
Muhith reprimands ministries for failure to offload SoEs' shares
FE Report (February 02, 2011)
Finance Minister AMA Muhith has reprimanded the ministries concerned for their failure to offload shares of the state-owned enterprises (SoEs) under their control defying the directives from the Prime Minister, a top official in the Ministry of Finance (MoF) said.
Muhith in an official note sent early this week made a few harsh observations about the defaulting ministries.
The MoF has convened a meeting on February, 10 to review the status of SoEs' share offloading.
The MoF Monday last sent letters to different ministries including ministries of power, energy and mineral resources and civil aviation criticising them for ignoring the decision coming from the highest authority of the government on offloading the shares of the state-owned firms.
The letter, a copy of which is available with the FE, contains the observation made by the finance minister.
Earlier, Hasina in November, 2010 approved a proposal of the finance ministry to offload up to 49 per cent stakes the government holds in 27 SoEs by December of the same year.
'The deadline (to offload the shares of SoEs) was set after obtaining approval from Prime Minister. No ministry can change the deadline. So, energy and mineral resources division did not act rightfully,' the letter quoted Muhith, as saying.
Of the 27 enterprises, nine fall under the power and energy ministry, eight under the industries ministry, four under the post and telecommunication ministry, and three under the civil aviation and tourism ministry. The rest three are under the communications, shipping and health ministries.
Of the 27 SoEs, eight are already listed on the capital market. However, three (Padma Oil, Atlas Bangladesh and Usmania Glass) were asked not to offload their shares further as 49 per cent of their stakes are already held by general investors.
The remaining five state firms were asked to offload up to 49 per cent of their shares.
However, barring the Rupali Bank Ltd none of the SoEs slated for listing has so far implemented the decision of the government.
Officials in the MoF said energy and mineral resources division had informed them about the decision to extend the deadline for offloading the shares of their three firms to March 31, 2011. The division had taken decision on its own and did not bother to have consultation with the finance ministry, they said.
The four SoEs are -- Jamuna Oil, Meghna Petroleum and Eastern Lubricants.
Muhith in an official note sent early this week made a few harsh observations about the defaulting ministries.
The MoF has convened a meeting on February, 10 to review the status of SoEs' share offloading.
The MoF Monday last sent letters to different ministries including ministries of power, energy and mineral resources and civil aviation criticising them for ignoring the decision coming from the highest authority of the government on offloading the shares of the state-owned firms.
The letter, a copy of which is available with the FE, contains the observation made by the finance minister.
Earlier, Hasina in November, 2010 approved a proposal of the finance ministry to offload up to 49 per cent stakes the government holds in 27 SoEs by December of the same year.
'The deadline (to offload the shares of SoEs) was set after obtaining approval from Prime Minister. No ministry can change the deadline. So, energy and mineral resources division did not act rightfully,' the letter quoted Muhith, as saying.
Of the 27 enterprises, nine fall under the power and energy ministry, eight under the industries ministry, four under the post and telecommunication ministry, and three under the civil aviation and tourism ministry. The rest three are under the communications, shipping and health ministries.
Of the 27 SoEs, eight are already listed on the capital market. However, three (Padma Oil, Atlas Bangladesh and Usmania Glass) were asked not to offload their shares further as 49 per cent of their stakes are already held by general investors.
The remaining five state firms were asked to offload up to 49 per cent of their shares.
However, barring the Rupali Bank Ltd none of the SoEs slated for listing has so far implemented the decision of the government.
Officials in the MoF said energy and mineral resources division had informed them about the decision to extend the deadline for offloading the shares of their three firms to March 31, 2011. The division had taken decision on its own and did not bother to have consultation with the finance ministry, they said.
The four SoEs are -- Jamuna Oil, Meghna Petroleum and Eastern Lubricants.
Tuesday, February 1
SEC likely to revise existing margin loan ratio
FE Report (February 01, 2011)
The securities regulator will sit today (Tuesday) with key stakeholders of the stock market in a move to take measures for a sustainable stock market, sources said. At the meeting, the leaders of both the bourses, Bangladesh Merchant Bankers' Association (BMBA) and Bangladesh Association of Publicly Listed Companies (BAPLC) are expected to remain present. According to sources, the SEC is likely to revise the existing margin loan ratio on the basis of discussion with the stakeholders; and the merchant bankers are likely to get some responsibilities in providing their margin loans.
The securities regulator will sit today (Tuesday) with key stakeholders of the stock market in a move to take measures for a sustainable stock market, sources said. At the meeting, the leaders of both the bourses, Bangladesh Merchant Bankers' Association (BMBA) and Bangladesh Association of Publicly Listed Companies (BAPLC) are expected to remain present. According to sources, the SEC is likely to revise the existing margin loan ratio on the basis of discussion with the stakeholders; and the merchant bankers are likely to get some responsibilities in providing their margin loans.
'Stock mkt crash won't affect revenue earning'
FE Report (February 01, 2011)
The National Board of Revenue (NBR) Monday said its revenue earning would not be affected due to the recent stock market crash.
The board has also blamed the big players for share market scam saying that individual investors constitute a small portion of the market.
Our revenue earning target from the stock market for the current fiscal was originally based on a daily turnover of Tk 15 billion. The daily turnover has now dropped to Tk 10 billion, which had earlier soared to Tk 30 billion. So, we are optimistic to meet the target on an average," said Aminur Rahman, income tax policy member of the board.
Basir Uddin Ahmed, tax administration and monitoring member, said: "Share market is not an economic indicator. Revenue earning depends on export diversification and domestic production."
The NBR members said these while responding to a query from newsmen at a press briefing on NBR premises in the city.
"Tax measures had nothing to do with the recent developments in the share market," said NBR chairman Dr Nasiruddin Ahmed.
About imposition of gain tax on individual investors, the NBR chief said: "We will think about it later. But we will have to be cautious before taking any step for the sake of the growth of the capital market."
Aminur Rahman said around 65 per cent investors are institutional while 35 per cent are individuals. He also said institutional investors might be responsible for share market scam, not individuals.
Basiruddin Ahmed said the NBR always sets target considering the risk factor, if any sector collapses it would meet revenue earning target from other sector.
NBR chairman briefed newsmen on the revenue earning of the Board in the first half of the current fiscal. Revenue earning posted 109 per cent growth over the target and 27 per cent growth over the corresponding period last year.
"Income tax achieved the highest growth of about 34 per cent. It is a record since independence of the country," the NBR chief said.
He expressed optimism over surpassing the revenue earning target set for the current fiscal.
In the July-December period, VAT collection posted 30 per cent growth while customs (export and import) 20 per cent over those of the corresponding period.
Customs member Hossain Ahmed said: "The customs duty collection turns higher due to increased import of raw materials and capital machinery."
On upward trend in revenue earning amid sluggish economic situation, NBR members listed increased efforts, field-level visits, motivational campaigns and intensified monitoring for the success.
On two draft laws for direct tax and VAT, the NBR has sought opinion from experts to improve those laws.
Aminul Karim, income tax member (tax exemption), said the board has now taken a strict position on offering new tax exemptions.
Farid Uddin, member VAT and customs administration, said the NBR is going to introduce ADR within a short period.
"We have observed the best practice of ADR in South Africa recently. Around 80 per cent of the cases are being solved with the ADR," he said.
The National Board of Revenue (NBR) Monday said its revenue earning would not be affected due to the recent stock market crash.
The board has also blamed the big players for share market scam saying that individual investors constitute a small portion of the market.
Our revenue earning target from the stock market for the current fiscal was originally based on a daily turnover of Tk 15 billion. The daily turnover has now dropped to Tk 10 billion, which had earlier soared to Tk 30 billion. So, we are optimistic to meet the target on an average," said Aminur Rahman, income tax policy member of the board.
Basir Uddin Ahmed, tax administration and monitoring member, said: "Share market is not an economic indicator. Revenue earning depends on export diversification and domestic production."
The NBR members said these while responding to a query from newsmen at a press briefing on NBR premises in the city.
"Tax measures had nothing to do with the recent developments in the share market," said NBR chairman Dr Nasiruddin Ahmed.
About imposition of gain tax on individual investors, the NBR chief said: "We will think about it later. But we will have to be cautious before taking any step for the sake of the growth of the capital market."
Aminur Rahman said around 65 per cent investors are institutional while 35 per cent are individuals. He also said institutional investors might be responsible for share market scam, not individuals.
Basiruddin Ahmed said the NBR always sets target considering the risk factor, if any sector collapses it would meet revenue earning target from other sector.
NBR chairman briefed newsmen on the revenue earning of the Board in the first half of the current fiscal. Revenue earning posted 109 per cent growth over the target and 27 per cent growth over the corresponding period last year.
"Income tax achieved the highest growth of about 34 per cent. It is a record since independence of the country," the NBR chief said.
He expressed optimism over surpassing the revenue earning target set for the current fiscal.
In the July-December period, VAT collection posted 30 per cent growth while customs (export and import) 20 per cent over those of the corresponding period.
Customs member Hossain Ahmed said: "The customs duty collection turns higher due to increased import of raw materials and capital machinery."
On upward trend in revenue earning amid sluggish economic situation, NBR members listed increased efforts, field-level visits, motivational campaigns and intensified monitoring for the success.
On two draft laws for direct tax and VAT, the NBR has sought opinion from experts to improve those laws.
Aminul Karim, income tax member (tax exemption), said the board has now taken a strict position on offering new tax exemptions.
Farid Uddin, member VAT and customs administration, said the NBR is going to introduce ADR within a short period.
"We have observed the best practice of ADR in South Africa recently. Around 80 per cent of the cases are being solved with the ADR," he said.
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