কেপিসিএল -এর লেনদেন আপাতত স্থগিত থাকবে
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It will also look into whether any money has been drained off the market, Finance Minister AMA Muhith said yesterday.
The government has suspended the book building method for initial public offering (IPO).
“We will form a probe committee in 15 days to find out what went wrong in the stockmarket,” said Muhith.
The minister was speaking at a press conference in the Secretariat after a meeting with stakeholders in the morning and another with high-ups of the central bank and the Securities and Exchange Commission (SEC).
“We introduced the book building system with a hope that the stockmarket will benefit from it. But the system did not work as expected. We have suspended the system and it will be redesigned,” he said.
The RAK Ceramics was listed on the Dhaka Stock Exchange since introduction of the book building system, and there is no complaint against the company.
“Two other companies are in the pipeline to complete the IPO process under the book building method -- the plans have been postponed,” said the finance minister without mentioning the names of the two companies.
According to stockmarket disclosures, Mobil Jamuna Ltd and MI Cement Ltd have already completed their IPO subscriptions, and now wait for the regulator's approval to hold IPO lotteries. The two companies were at the heart of the debate over the new method.
Other companies including GMG Airlines, Unique Hotel and Resorts that owns the Westin hotel, PHP Float Glass and Ananda Shipyard have either completed the institutional bidding or IPO roadshows.
Of them, GMG Airlines drew attention of many participants at yesterday's meeting between the finance minister and the stakeholders. The once-troubled airline got a financial lifeline after leading businessman Salman F Rahman bought a 50 percent stake in the company.
The government will examine the balance sheets of the companies eager to enter the stockmarket under the book building method following allegations of fraudulence, said some stakeholders present in the afternoon meeting.
Muhith ruled out the rumour that a huge amount of money was siphoned from the stockmarket.
He however admitted that some money had been taken out of the market, and they are looking into the matter.
“It is a stupid talk that money has been taken out of the market. Only a handful of money might have gone out,” he said.
The finance minister said the regulator is now better equipped to detect stockmarket manipulators.
“Cases have been filed against some people in 1996, but we could not prove the allegations against them for lack of evidence and witnesses. But this time we have the CDBL record.”
The government decided to discontinue the circuit breaker on share indices and ask the banks to reinvest in the market a portion of their profits from stock trading.
The minister said the merchant banks have made substantial profits from the market.
A source present at one of the meetings said the central bank had been asked to find a mechanism of how a portion of the profits can be reinvested in the stockmarket.
Muhith said the market reopens tomorrow to give it some time to keep pace with the latest decisions that take effect the same day.
“To restore confidence to the investors, we want to adopt some regulations and practices that will take effect from Tuesday. I hope the market will remain stable on its resumption,” he said.
Muhith said all stakeholders including the government, the SEC, two stock exchanges, merchant banks, institutional and general investors had a “special role” behind the stock market crisis.
“I only spoke about the SEC and us yesterday [Saturday]. There is enough to look at the way stock exchanges, merchant banks, institutional investors and general investors had behaved. It is fortunate that there is still enough scope to look at it,” he said.
“Thanks to CDBL, we will be able to see how transactions have been made. We can easily find the accounting of book building method. It is likely that many things will come to light following the probe.”
He said there might be a lack of coordination in running the market. “The Bangladesh Bank, SEC and stock exchanges regularly hold talks, but the frequency and intensity of the discussion should go up at the moment.”
“The SEC advisory board that has not been effective enough needs to sit more frequently to revamp the market,” he said.
Muhith said the board will be restructured in a week or two for playing a robust role.
He said they plan to prepare a reform package in various areas such as private placement but that will take time.
“We do not have adequate regulations about private placement.”
On the margin loan, he said it will be up to the lender and the receiver. “The SEC will only fix the margin loan ratio but won't intervene beyond that,” Muhith said.
About the circuit breaker on share indices, the minister said they will discontinue the index circuit breaker for lack of software to put the system in place.
The government also considers altering the companies law and introducing the buyback system for the companies that see their prices fall in a certain period after listing.
The minister said adequate importance was not attached to the PE ratio while following the book building method. Rather, the people concerned spent too much time on the market.
The system will remain suspended until it is redesigned properly, he said.
Lending his support to the SEC, the minister said, “The market regulator's workload has increased over the last two years. We have decided to double its manpower.”
He said appointment of a central bank representative in the SEC will be made mandatory for a better coordination between the two.
Muhith said the central bank will be flexible to merchant banks' exposure to the stockmarket.
He urged retail investors to be cautious before investing in the market.
“It is not that kind of market where you invest Tk 10 and expect Tk 15 the following day.”
“I think many still do not know the face value of the shares they are investing in. They have to be careful. Stock exchanges, bankers, merchant banks, institutional investors and regulators have to make them aware.”
Given the limited number of shares with strong fundamentals, the PE ratio of 23 is not extremely high, he said.
“We see the same type of ratio in neighbouring countries. The PE ratio might seem higher here since we have a small market.”
“The PE ratio of 23 is tolerable but not ideal. Of course, there is risk in the market,” he said in reply to a query.
SEC Chairman Ziaul Haque Khandkar said the country's stockmarket index grew by almost 80 percent last year, the highest in the world.
“As a result, we took decisions every now and then to control the market,” he said. “We will now take mid and long-term policies, and give directives to merchant banks on margin loans. Bit we will not intervene in their implementation process.”
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Wrongs under probe
The government will form a high-profile committee to probe the allegations of stockmarket manipulation by inflating share prices or misusing the book building method.It will also look into whether any money has been drained off the market, Finance Minister AMA Muhith said yesterday.
The government has suspended the book building method for initial public offering (IPO).
“We will form a probe committee in 15 days to find out what went wrong in the stockmarket,” said Muhith.
The minister was speaking at a press conference in the Secretariat after a meeting with stakeholders in the morning and another with high-ups of the central bank and the Securities and Exchange Commission (SEC).
“We introduced the book building system with a hope that the stockmarket will benefit from it. But the system did not work as expected. We have suspended the system and it will be redesigned,” he said.
The RAK Ceramics was listed on the Dhaka Stock Exchange since introduction of the book building system, and there is no complaint against the company.
“Two other companies are in the pipeline to complete the IPO process under the book building method -- the plans have been postponed,” said the finance minister without mentioning the names of the two companies.
According to stockmarket disclosures, Mobil Jamuna Ltd and MI Cement Ltd have already completed their IPO subscriptions, and now wait for the regulator's approval to hold IPO lotteries. The two companies were at the heart of the debate over the new method.
Other companies including GMG Airlines, Unique Hotel and Resorts that owns the Westin hotel, PHP Float Glass and Ananda Shipyard have either completed the institutional bidding or IPO roadshows.
Of them, GMG Airlines drew attention of many participants at yesterday's meeting between the finance minister and the stakeholders. The once-troubled airline got a financial lifeline after leading businessman Salman F Rahman bought a 50 percent stake in the company.
The government will examine the balance sheets of the companies eager to enter the stockmarket under the book building method following allegations of fraudulence, said some stakeholders present in the afternoon meeting.
Muhith ruled out the rumour that a huge amount of money was siphoned from the stockmarket.
He however admitted that some money had been taken out of the market, and they are looking into the matter.
“It is a stupid talk that money has been taken out of the market. Only a handful of money might have gone out,” he said.
The finance minister said the regulator is now better equipped to detect stockmarket manipulators.
“Cases have been filed against some people in 1996, but we could not prove the allegations against them for lack of evidence and witnesses. But this time we have the CDBL record.”
The government decided to discontinue the circuit breaker on share indices and ask the banks to reinvest in the market a portion of their profits from stock trading.
The minister said the merchant banks have made substantial profits from the market.
A source present at one of the meetings said the central bank had been asked to find a mechanism of how a portion of the profits can be reinvested in the stockmarket.
Muhith said the market reopens tomorrow to give it some time to keep pace with the latest decisions that take effect the same day.
“To restore confidence to the investors, we want to adopt some regulations and practices that will take effect from Tuesday. I hope the market will remain stable on its resumption,” he said.
Muhith said all stakeholders including the government, the SEC, two stock exchanges, merchant banks, institutional and general investors had a “special role” behind the stock market crisis.
“I only spoke about the SEC and us yesterday [Saturday]. There is enough to look at the way stock exchanges, merchant banks, institutional investors and general investors had behaved. It is fortunate that there is still enough scope to look at it,” he said.
“Thanks to CDBL, we will be able to see how transactions have been made. We can easily find the accounting of book building method. It is likely that many things will come to light following the probe.”
He said there might be a lack of coordination in running the market. “The Bangladesh Bank, SEC and stock exchanges regularly hold talks, but the frequency and intensity of the discussion should go up at the moment.”
“The SEC advisory board that has not been effective enough needs to sit more frequently to revamp the market,” he said.
Muhith said the board will be restructured in a week or two for playing a robust role.
He said they plan to prepare a reform package in various areas such as private placement but that will take time.
“We do not have adequate regulations about private placement.”
On the margin loan, he said it will be up to the lender and the receiver. “The SEC will only fix the margin loan ratio but won't intervene beyond that,” Muhith said.
About the circuit breaker on share indices, the minister said they will discontinue the index circuit breaker for lack of software to put the system in place.
The government also considers altering the companies law and introducing the buyback system for the companies that see their prices fall in a certain period after listing.
The minister said adequate importance was not attached to the PE ratio while following the book building method. Rather, the people concerned spent too much time on the market.
The system will remain suspended until it is redesigned properly, he said.
Lending his support to the SEC, the minister said, “The market regulator's workload has increased over the last two years. We have decided to double its manpower.”
He said appointment of a central bank representative in the SEC will be made mandatory for a better coordination between the two.
Muhith said the central bank will be flexible to merchant banks' exposure to the stockmarket.
He urged retail investors to be cautious before investing in the market.
“It is not that kind of market where you invest Tk 10 and expect Tk 15 the following day.”
“I think many still do not know the face value of the shares they are investing in. They have to be careful. Stock exchanges, bankers, merchant banks, institutional investors and regulators have to make them aware.”
Given the limited number of shares with strong fundamentals, the PE ratio of 23 is not extremely high, he said.
“We see the same type of ratio in neighbouring countries. The PE ratio might seem higher here since we have a small market.”
“The PE ratio of 23 is tolerable but not ideal. Of course, there is risk in the market,” he said in reply to a query.
SEC Chairman Ziaul Haque Khandkar said the country's stockmarket index grew by almost 80 percent last year, the highest in the world.
“As a result, we took decisions every now and then to control the market,” he said. “We will now take mid and long-term policies, and give directives to merchant banks on margin loans. Bit we will not intervene in their implementation process.”