2 months ago

An advisory body that couldn't work

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All is now quiet on the country's stock market front.

With daily turnover plummeting below Tk 3.0 billion and the main index hovering at around 6,300 points, the market, maybe for the time being, is almost in a moribund state.

The floor price mechanism introduced by the securities regulator several months back to stop the free fall of the share prices is taking a heavy toll on both market and investors. Thousands of investors are stuck in a muddy terrain as they are no takers of their stocks at the prevailing floor prices. So, there is no exit for them. The regulator, it seems, is reluctant to withdraw the floor price fearing a collapse of the market. Small-cap companies and junk shares now dominate the small-scale daily transactions at the bourses.

Why has the market come to such a state when, even during the second year of the Covid-pandemic, it was going up and up and was about to reach the 8,000-point mark in the middle part of 2021?

The ongoing economic situation marked by the dollar crisis and the Russia-Ukraine war surely has impacted the market. But there was something else. The rot that started at the beginning of the last calendar year has only aggravated further with every passing month. A section of market insiders suspects a scheme hatched by some behind-the-scene players to mobilise a substantial amount of funds from an artificially buoyed-up market played a major part. Following the execution of the plan, the market was left to its way of operation.

All the stakeholders appear to be clueless about the ways of reviving the market. The voices that sounded unusually optimistic about the astronomical growth of the market are maintaining an eerie silence.

In such a situation, an advice from stock market experts and economists could prove useful. The Bangladesh Securities and Exchange Commission (BSEC) has a high-profile advisory committee to suggest changes in policies and actions if necessary.

Unfortunately, the BSEC has never felt the necessity of taking suggestions from the advisory committee formed following the 2010 market debacle.

The advisory committee, according to a report published in the Financial Express on Tuesday last, sat only once in 2014. Economists and heads of the chamber and professional bodies, stock exchanges, and financial institutions, among others, are members of the committee. Some of the members even cannot remember their involvement with the committee that was formed to weather a crisis facing the country's stock market!

The BSEC is now reportedly working on the formation of a new committee and a few names are under consideration. The move goes in line with what the government always does following a crisis or a major incident. Usually, the government forms probe committees and asks those to submit reports within certain deadlines. The committees do submit reports only to be pushed under the rug. Very rarely, the content of the reports is made public.

The BSEC knows better the reasons behind forming a new advisory committee to replace the existing one. What is the guarantee the new committee would not face a fate identical to the existing one?

The ongoing developments in the market necessitate appropriate actions. Enough damage has already been done. Once allowed to offload shares, many investors might leave the market for good.

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