Finance minister, AHM Mustafa Kamal, said he does not see any major problem in the prevailing trend in the capital market.
"I think the (capital) market is on a right track. Ups and downs in the market are common phenomena everywhere in the world," the minister said.
He made the remarks while talking with reporters Monday after a pre-budget meeting with the Bangladesh Securities and Exchange Commission (BSEC) at its office in the city.
About the positive side of the capital market, he said P/E (price earning) ratios of the companies presently are at a tolerable level.
"Earlier, the P/E ratios were between 80 and 90. Now, ratios are not above 20. The companies having lower P/E ratios are safe," the minister said.
Mr Kamal said in 1989, the index of the Japanese capital market was over 39,500 points, which came down to 7,000 in 2007.
"The index of our market was 5,900 points, which came down to 5,300 points. The market can rise or fall," the finance minister said.
The broad index of the Dhaka Stock Exchange (DSE) was 5,950 points on January 24, which fell to 5,323 on April 21.
He, however, was sceptical about the media reports on the declining trend in the capital market.
"As per your reports, it seems that there is no market, no Bangladesh and no authority. At first, you (newsmen) sit and fix what should be the level of index of the capital market," the minister said.
The minister noted that the index and market capitalisation are at the "right" level in the context of the economy.
In contrast, experts on several occasions laid importance on listing of more companies having good fundamentals as the growth of the capital market fails to keep pace with that of the roughly US$300 billion economy.
The ratio of market capitalisation to GDP, one of the major indicators of measuring depth of a market, is below 15 per cent, whereas the ratios are above 20 per cent in neighbouring countries. The ratios are above 100 per cent in the markets of Thailand, Malaysia, Tokyo and Singapore.
The finance minister said the capital market is in a good shape compared to the country's economy.
The financing scopes and employment will be created if the market becomes sound, the minister said.
Mr Kamal said the problem is that the number of educated investors is quite low in Bangladesh, whereas most of the investors in other capital markets are educated.
"We would not have to worry if the investors were well educated," the minister said.
He also said some vested quarters must be active behind the volatilities and they were behind the stock market crashes of 1996 and 2010.
"We will trace them out," the minister said.
Asked about any move on the listing of multinational companies, the minister said the government cannot put pressure on anyone to offload shares in the capital market.
Following another question regarding the listing of more local companies having good fundamentals, the minister said good companies also turn worse after listing.
Asked about proper punishment for manipulators, the minister said investors are not sent to jail in many countries.
"But investors are sent to jail here. Punitive measures are taken against them," the finance minister said.
BSEC chairman professor M Khairul Hossain, three commissioners and top executives were present at the meeting.
After the meeting, the BSEC executive director Mohammad Saifur Rahman said they held the meeting to discuss some budgetary issues to support the capital market.
"We also requested the minister to enhance the capacity of the Investment Corporation of Bangladesh (ICB). The minister assured us of looking into the matter," Mr Rahman told the FE.
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