Razib Zaman interviews Mostaq Ahmed Sadek (Right)

Merchant banks borrow from their parent organisations but they have to waive interests. They thanked the scheme committee for recommending waiver of interests. They will be able to waive interests if their parent organisations do so.

Parent organisations are controlled by the Bangladesh Bank. So, the recommendations cannot be implemented unless BB issues any circular. There is nothing to worry about. It will be implemented.

The authority concerned should take the initiate to execute the recommendations hurriedly to bring back confidence over the market, Mostaq Ahmed Sadek, Managing Director of Investment Promotion Services said at an interview with Razib Zaman of ETV.

The following is the details of the interview.

* DSE Chairman to be elected today (Thursday).

# Directors elected by the members of the brokerage houses will choose the chairman. The elected chairman will gain popularity, we expect. A competent leadership is required for overall improvement of the stock market. We hope, voters will not make any mistake in electing a new leader of the country's prime bourse.

* Investors several times in the past became frustrated as the decisions taken by the authority were not implemented. For example, we can talk about arrival of new funds. How do you evaluate this issue?

# We heard about arrival of funds but no fund entered into the market yet. It was reported in Today's (Thursday) newspapers that financial institutions earned crores of taka, and their lions part came from the share market. But institutional investors do not provide any support to the market. Several quarters blame that government's bank borrowing is responsible for such a crisis, but so far I know the government made some repayments.

* (Ratan from Bhairab through telephone): I purchased shares seeing PE-ratio, but now suffered 20 percent loss. What should I do?

# The ups and downs of share prices has to be considered as normal phenomena. If you look at different stock exchanges around the globe, you will observe that investors even suffer up to 70 percent losses. It will not take much time to recover your 20 percent loss. Please have patience.

* You said online trading will start from 25 March though there are no complexities regarding omnibus account. What would you say about this?

# We are going for online trading on 25 March. Notice has been served in this regard. We have to purchase new server for starting online trading. Every house has to spend Tk 1.5 to 2.0 million. And we are ready. The advantage of online trading you will be able to operate share transactions from your home with a broker ID number. Earlier you had to come to the brokerage houses for trading. Investors in remote areas or abroad will also be able to trade. So the sphere of share trading will be expanded.

* (Monir through telephone): I have seen in newspapers that transactions of MH Securities have been suspended. I have many IPOs there. Can those be sold? What am I to do?

# DSE has given notice that those who used to trade with MH Securities can go to other brokerage houses through link accounts or can withdraw funds. If you face problems you can contact DSE directly.

* Entrepreneur directors do not have much time on their hands to buy shares. Would you say something about it?

# They have 10 to 12 days to purchase shares. They will have to purchase about 80 percent shares. To my knowledge, the banks earned good profits but declared dividend according to their own will. I can't understand why they are doing so miserly. Every brokerage house and merchant bank can introduce advisory service after taking licence from DSE. They can take advisory fee and charge. If you are capable of providing service, and have adequate technical knowledge then you can apply for licence. If this service starts then rumours will end.

* You have visited many stock exchanges of the world. You might have notices that the number of institutional investors is higher than personal investors in those countries. Would you kindly make the matter clear?

# Retail traders like our country is not seen in anywhere in the world. Fund managers conduct business in every country. Institutional investors do not play any role of fund managers here. Merchant banks could and should have played the role of fund managers. Everyone is playing the role of retailer. Nobody is going into long-term investment. Had they done so then 50 percent shares would have been blocked - then the market would have stabilised. Everyone has the tendency to be rich over the night.

* Merchant banks are saying that they are suffering for sanctioning excess loans or from notices served by SEC. What is your opinion regarding this?

# Who encouraged them to give excess loans. Merchant banks have done business two folds - on one hand they did interest business. They encouraged investors in taking loans. They offered Tk 1 crore loan against deposit of Tk 1 crore. Merchant banks lobbied and took permission from SEC to give loans. When the market became overheated they stopped giving loans. They used this process as a key. It is they who damaged the market, so they cannot avoid their responsibilities. Investors didn't force them to provide loans. They cannot say they are not responsible.

* If I buy shares through advisory service of a company, can I claim compensation?

Another question: What will happen if anyone buys shares through advisory service?

# When you open BO accounts with a brokerage house you will have to decide what type of account it will be, and whether you need advisory service. If yours is a discretionary account then all the responsibility will go with brokerage houses. It will ask for a fee or you can share a certain percentage of profit with them. If you want to open an account or know in details, you can talk to a brokerage house.

Whatever entrepreneur directors may have done, if they want to stay as directors they will have to buy certain percentage of shares set by the government within 15 days.

The Daily Sun/Bangladesh/ 16th March 2012