Market experts say good shares, IPOs must to keep market stable

Stock market experts have said that the only way to avert another market collapse and ensure a robust market is to take steps for the entry of good shares into the market.

They made their observations to bdnews24.com in the wake of the continued market surge and amidst a buoyant finance minister exuding confidence about having a formidable stock market by 2020.

However, the experts have also said that the ominous sign of rising the price of ‘bad shares’ are also there in the market, which might lead to a market collapse, again.

The rise in transactions and upward trend in index, visible from the beginning of the year, continued unabated on Monday, when the DSE closed business after another round of record transactions since 2010.

The market saw transactions worth Tk 21.81 billion while the market index stood at about 5,700 points.

Amidst the euphoria, former BSEC chairman A B Mirza Azizul Islam said, "In this situation if new and good shares do not enter the market, the bad shares will become costlier and this may lead to a market crash, similar to that of 1999 or 2010."

He reminded that the introduction of Grameen Phone shares in 2009 provided many with the opportunity to make profits. There has hardly been a better share than that of GP in the market, he added.

The market crashes of 1999 and 2010 had left many investors bankrupt after they ‘gambled’ everything they had in the share market rush.

After the 2010 crash, the government has been desperately trying to rejuvenate the share market.

Only recently, the efforts seem to have paid off with the market started to soar from the beginning of the year.

A B Mirza Azizul Islam (File Photo)

While stressing on the need for better share quality, AB Mirza Azizul Islam also advised individual investors to be careful in deciding to pick right shares to invest.

Dhaka Stock Exchange Director Rakibur Rahman also wants big companies to enter the market.

Considering the ‘seasonal’ investors are coming in the wake of the market boom, Rahman said that the need of the hour was to have '3000 organizations' offering shares.

He said that attempts should also be made for the introduction of at least '2-3 new IPOs every month.'

He too expressed fears that in the absence of good shares, the prices of bad shares could shoot up.

Rakibur Rahman (File Photo)

Rahman also had some suggestions on how the government could induce the entry of good companies into the market.

He said that banks should be asked not to provide big companies with large loans so that the companies will have no other way but to collect funds from the share market."

Like Finance Minister AMA Muhith, he also believes that Bangladesh stock market will reach a ‘solid footing’ by 2020.

On Sunday, Muhith said that Bangladesh's growth figures had never slumped lower than 6 per cent in the last two decades.

"Very few countries can boast of such a record," he said.

"I believe we will have a very strong stock market by 2020," he said.