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THE capital market of the country lacked many of the features of developed capital markets in the past and the same were considered as its weaknesses and reasons for its underperformance.
One by one these deficiencies were sought to be removed. The regulatory mechanism and its supervision was strengthened with the establishment of the Securities and Exchange Commission (SEC), automated share trading and training of SEC personnel abroad and other steps taken to streamline the functioning of the market. The last one in these measures was the central depository system (CDS).
But in the peculiar state of the market in Bangladesh only automation and regulation are not likely to prove enough to give a proper boost to it. There are other sides to its development and these do not involve so much greater automation or regulatory activities really but the creation of incentives for ordinary people in a much greater number to join it. Among them, should be the building of motivation to buy company shares.
Investors in a large number are likely to take a fresh interest in the capital market provided they find real indications of better returns from their investment in it.
As it is, many small investors still cannot overcome the memories of a melt down in the market they suffered years ago after gross manipulative activities. Besides, they have this recurring experience of companies manipulating their annual general meetings (AGMs) to hide the actual state of profits through diversion to other accounts to avoid paying proportionate dividends to shareholders.
It was considered long ago that government could off-load the shares of its profitable enterprises and this could be a major inducement for the buyers to return to the market. But these tasks have not been done with the needed enthusiasm.
Thus, all-round development of the capital market is only possible by addressing the hard issues linked to such development.
Ayesha Ahmed Tarafdar
Rampura,
Dhaka
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