Need More than Props
The steps government has taken to shore up the free falling share market prices come in quite an assorted package with a diffused focus, so to speak. Besides, short-gestation measures are fewer in number as compared with the long-term, futuristic ones.
We appreciate that the government has raised the credit limit for brokers and dealers from the current 50 per cent to 60 per cent of the mean average of prices of a scrip for the last six months. What is more important is the directive issued to the NCBs, BSB and BSRS to support the market revival effort "within their resources". The idea of creating an additional demand in the stock market by involving the development financing institutions as brokers strikes a responsive chord with us. Subject to further improvement in the NCBs' liquidity positions one would also like to see the uncapping of bank lending to buyers. The sooner the 14 merchant banks come into operation the better for the bourses. A certain buoyancy will then be built into the floor transactions.
The brain-wave to allow the companies to buy back scrip losing out even on their fundamentals sounds good but only as a prop. We are not so much for artificial resuscitation of the stock market from time to time as we are for a streamlined and stabilised operation of the bourses. We should not be moving from one crisis management situation to another with a geometric regression of public trust in the Dhaka Stock Exchange, or for that matter, the Securities and Exchange Commission.
The problem is germane to the unstoppably declining public confidence in the whole operational system of the DSE which is archaic and so thoroughly open to insider manipulation as well outsider scheming and subversion.
So long as we keep the stock market reform agenda in a hanging state we shall continue to have panicky recourses to ad-hoc steps that add up to virtually nothing. Let's have the central depository system and automation in place at the earliest so as to match the international standards of stock market management operations.
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