Experts concerned over investors' dependency on 2pc shareholding
Presidents of the bourses and experts have expressed their concern over investors' 'over dependency' on the issue of holding minimum two per cent shares by sponsor-directors, as at present, it seems to surpass all other fundamentals issues.
They said there are other important fundamental issues, which should be considered for the market's growth and stability.
Their comments came Monday, as the market has recently faced volatility due to rumours regarding the upcoming verdict on the writ petitions filed with the High Court (HC), challenging the directive of holding minimum two per cent shares by sponsor-directors.
"What's the necessity of such a market where the investors mainly depend on the issue of holding 'two per cent' or 'thirty per cent' shares?" said the Dhaka Stock Exchange (DSE) president Rakibur Rahman.
He said in a stock market the dependency on rumours may be twenty to thirty per cent. "But how is it possible that the investors fully depend on rumours?"
He said a group of unscrupulous people are spreading rumours regarding the writ petitions.
"Some people are saying a lawyer is not related with the petition. On the other hand, others are saying that such lawyer is related with the petition. As a result, the market is experiencing a volatile situation," Rahman said.
He said rumours were also created while the monetary policy was unveiled.
"The central bank fixes its monetary policy considering the national economy. So, why will the investors depend on rumours without depending on the companies' fundamentals?"
He said the securities regulator and both the stock exchanges are trying to win the writ petitions. "But the natural growth of the market will be affected, if other fundamental issues are not prioritised."
Akter H Sannamat, a market expert and former managing director of Prime Finance and Investment, said other issues, which should be addressed at this moment, are becoming invisible due to the recurrent discussion on holding minimum two per cent shares by the sponsor-directors.
"The issue of purchasing shares by sponsor-directors is a short-term measure. What will happen after the issue is over?"
He said it is necessary to put light on other important long-term issues besides minimum shareholding by sponsor-directors.
"Now we should think about the upcoming budgetary measures, which will have a long-term impact on the market," Sannamat said.
He stressed on bringing more foreign investors by offering them facilities for the sake of long-term development of the market.
"Other important issues will remain unaddressed, if the authorities concerned and the investors mainly focus on minimum shareholding by sponsor-directors," Sannamat added.
However, the Chittagong Stock Exchange (CSE) president Al-Maruf Khan expressed different opinions regarding the issue of holding minimum two per cent shares by sponsor-directors.
"Minimum holding of shares by sponsor-directors was an important issue in the stock market rejuvenation package. Other issues were suggestive. That's why, the investors' expectation regarding the compliance of purchasing two per cent shares was triggered," Khan told the FE.
However, the market will face more volatility, if it takes more time to settle the issue. The investors should not depend on only one issue to purchase or sell their shares, he added.
Professor Dr. Mahmood Osman Imam of finance department of Dhaka University said other issues should also be prioritised for the sake of the market.
"The issue of holding minimum portion of shares should have been solved earlier through relaxed way," Imam told the FE.
Financial Express/ Bangladesh/ 15th May 2012