Urges policymakers to stop blame-game
The Dhaka Stock Exchange on Thursday demanded Tk 5,000 crore budgetary allocation for the stock market in next budget and suspension of banks’ stock loss provisioning until 2014.
‘The finance ministry needs to allocate Tk 5,000 crore in the next budget to support the market in its crisis situation,’ DSE president Rakibur Rahman told in a press briefing.
He said the market is going through a tough phase and a government mechanism to support the market is needed to boost the investors.
He also said the Bangladesh Bank should exempt banks from provisioning of stock market losses until June 2014.
In the last six weeks, the benchmark index of Dhaka Stock Exchange, DSEX, lost 621 points amid significant fall of turnover.
The previous benchmark index of the bourse, DGEN, reached its record high on 5 December 2010 to 8,918.51 points which closed at 3,657.03 points on Wednesday.
‘We are trying at our level but as a stock exchange we do not have the authority to change government policies,’ Rakibur said.
He said if some government high-ups are making comments that DSE is delaying the demutualisation process then it will not reflect the truth.
‘We prepared the demutualisation act and submitted it to the finance ministry which is waiting to pass it in the parliament. So, the delay is surely not from our end,’ he said.
The finance minister Abul Maal Abdul Muhith on Monday told reporters that the brokers and dealers were manipulating the market for delaying demutualisation which was causing the recent fall of the market.
Rakib said the recent fall of the market was because of the ongoing political unrest in the country for last few months.
‘Was it the DSE who created the political problem or we have the responsibility or capacity to resolve the problem,’ he asked.
He said in the developed economy like USA they had stock market crash in 2009 but they recovered the crisis through a combined effort by the government and the central bank.
‘President Obama or the federal reserve’s chairman never blamed anyone but tried to solve the crisis with combined efforts,’ said Rakib.
He also said the government and the central bank should clear the confusion about banks stock market exposure to capital market under the new Bank Companies Act.
‘The International Monetary Fund has proposed 25 per cent of the regulatory capital which includes paid-up capital, some portion of liabilities and retained earnings. But the finance ministry is preparing the act with a provision of 25 per cent of the equity,’ he said.
He said that the IMF proposal is less harmful for the market than the finance ministry move.
Rakib said around Tk 24,000 crore was raised from the stock market since 2009 which helped the industrialisation of the country and also helped banks to fulfil their BASEL-II requirement of increasing paid-up capital.
DSE senior vice-president Ahmed Rashid Lali said the government needed to focus on policy adjustment rather than making sweeping comments.
‘It is unfortunate that whenever market makes an uptrend some comments from responsible chairs make the situation gloomy,’ he said.
He said the market is a very sensitive place and such comments from government high-ups hurt the mindset of the investors.
-With New Age input
