DBA urges Yunus to bring state-owned, multinational companies to capital market

The Dhaka Stock Exchange Brokers Association (DBA) has urged Chief Advisor Muhammad Yunus to take the initiative to bring state-owned and multinational companies operating in Bangladesh to the capital market.

In a statement, the DBA said its President Saiful Islam made the request in a letter to the interim prime minister on Tuesday.

The letter highlights that the stock market has suffered from severe irregularities, mismanagement, and instability for 15 years, leaving many companies ineffective or failing.

It says the market has contracted by nearly 40 percent in terms of real returns and capital due to these issues.

The DBA noted that past unfavourable events, along with local and international geopolitical factors, have hindered the market’s recovery.

The trade organisation said, “The ‘scams’ of 1996 and 2010 triggered financial crises that caused lasting damage to investor confidence and overall market integrity.

“During these periods, the artificial inflation of stock prices led to severe investor losses."

The organisation pointed out that the COVID-19 pandemic in 2020, coupled with the imposition of "floor prices" on stocks for nearly 20 months, caused lasting harm to the market.

This led international asset managers to pull out from Bangladesh while local investors incurred substantial losses in their savings and investments.

"During the period, billions were siphoned off through substandard [Initial Public Offering], creating a permanent liquidity and trust crisis in the market," the letter read.

The DBA observed that the lack of governance, transparency, and accountability among regulatory bodies, companies, market intermediaries, financial auditors, rating agencies, and other stakeholders has resulted in a severe crisis of trust.

The organisation has called for the leadership of the chief advisor to address the ongoing crisis swiftly.

It warned that failing to resolve the situation would result in missing a valuable opportunity to restore the market, enforce discipline, and create an environment conducive to capital mobilisation and business expansion for the country.

The letter further highlighted the availability of numerous profitable state-owned enterprises in the commercial and infrastructure sectors.

“If these companies are listed on the market, there will be a growing supply of quality stocks, which will help balance demand and supply.

“This will attract investors back to the market and resolve the liquidity issues.”

The DBA says many large multinational companies have been operating in the country for years.

It urged the government to offload its stakes in these companies through direct listing at fair prices.