Editorial
A win for Security Exchange Commission
A step in the right direction
In the aftermath of the share market debacle last December, a high profile probe committee went into action to find and address systemic faults in the country's bourses. Of the many recommendations, one important one was to set a minimum 2 per cent stake and 30 per cent stake jointly that directors of publicly listed companies must hold at all times. In this connection, the high court's ruling upholding Security Exchange Commission's (SEC) authority, under Section 2CC,to enforce the decision is a much welcome step in bringing about some semblance of order in the volatile stock market.
The fact that Dhaka Stock Exchange index has hit rock bottom is somewhat of an understatement. Indeed, the key index has lost nearly 1,300 points over the last two months and today it is at a three and half year low. It is hoped that the court's decision to grant SEC its power as the regulatory body will bring back some confidence among retail investors who have borne the brunt of losses over the last six months. But this decision alone will not rectify the current downturn. The market continues to suffer from a serious lack of liquidity. The often confusing statements coming from ministry of finance have also helped undermine general confidence. The mixed signals coming from policymakers have helped create a situation bordering on panic whereby shares have been offloaded in an effort to stop mounting losses the average retail investor has had to suffer.
Given the fact that the market has hit an all-time low and many good blue-chip company shares are actually undervalued, it is a good time to make investments. Such a tendency, if witnessed among retail investors could help rebound the negative trends in the two bourses. However, for that to happen, efforts must be made to stop making irresponsible remarks for the stock market is susceptible to negative statements. The HC ruling could not have come at a better time. Institutional investors stepping in to commence bulk buying will surely help stabilise an unsettled market and encourage the retail investors to return in large numbers.
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