Bringing multinationals to the stock market: analysts
Stock analysts yesterday urged the government to encourage multinational and local companies with good results to list to boost investors’ confidence in shares and ensure a “fair distribution” of profits.
They spoke at a panel discussion titled “Current and Future Perspectives of the Bangladesh Capital Market” organized by the Bangladesh Merchant Bankers Association (BMBA) and the Capital Market Journalists’ Forum (CMJF) at the Westin Dhaka.
Professor Abu Ahmed, former chair of the economics department at Dhaka University, said most companies allowed to go public over the past decade did not have such a good track record.
“Unilever, Nestlé and MetLife have been working in the country for years and making huge profits every year… Why don’t they share their profits with the people? He asked.
Many of them are listed in neighboring India and Pakistan, but not here. The government should think about it, he said.
The National Board of Revenue (NBR) narrowed the tax gap between listed and unlisted companies by 2.5 percentage points to 7.5 percentage points, Ahmed said.
However, stock analysts repeatedly called for the spread to be increased to 20 percentage points from 10 percentage points at the time, he said.
“Who did this, on what basis, I can’t figure it out,” he said.
However, Faruq Ahmad Siddiqi, former chairman of the Bangladesh Securities and Exchange Commission (BSEC), questioned the rationality of companies seeking funds on the stock market when they can easily obtain long-term funds from banks.
Unless easy long-term lending is stopped and good governance is ensured, companies will not come to the stock market. Unless companies with good results are listed on the stock market, the stock market will not grow, he added.
The tax gap can never be attractive, even if it reaches 20 percentage points, because there are many ways to evade tax, he said.
Thus, ensuring good corporate governance is necessary alongside implementing rules and regulations so that no one can evade tax, he said.
The government has reduced corporate tax for listed and unlisted companies to reduce overall corporate tax, which is relatively low overseas, said NBR member Mohammad Jahid Hasan.
The BNR is always ready to provide political support for the development of the stock market, he added.
“The stock price valuation in our stock market must be accurate to attract companies with good results,” said Professor Mohammed Helal Uddin, Director (Research) of the Center for Integrated Rural Development for Asia. and the Pacific.
“Our stock price mechanism has a serious problem, so ghee is sold here at the price of ash and ash is sold here at the price of ghee,” he said.
Unless there are good prices, good companies will not be interested in listing even if great tax incentives are offered, he added.
BSEC is trying to bring in multinationals and companies with good track records, for which it has already had talks with some of their top officials, Prof. Shibli Rubayat-Ul-Islam said.
A lack of returns in the money market and banking sector and other avenues are prompting investors to turn to the stock market, said Hasan Imam, president of the Association of Asset Management Companies and Mutual Funds of placement.
They are drawn to mutual funds for their performance, dividends and high yields, he said.
The mutual fund industry is looking to expand its footprint across the country with brokerage houses and the merchant banking ecosystem, he added.
Ziaur Rahman, Chairman of the CMJF, Kazi Sayedur Rahman, Deputy Governor of the Bangladesh Bank, Nojibur Rahman, Chairman of the Capital Market Stabilization Fund, Eunusur Rahman, Chairman of the Dhaka Stock Exchange, and Asif Ibrahim, Chairman of the Stock Exchange of Chittagong, also spoke at the event.