CSE limping in the hope of happy days

The Chittagong Stock Exchange, popularly known as CSE, commenced its journey on October 10 in 1995. The launching of CSE was soon followed by the scam of 1996. Investors, those lost money, lost confidence, and those who gained money kept quiet and not to draw attention of the authorities.

A number of cases are pending at the courts and we have no option but to wait until the veils are unwrapped by the courts of justice. You know that justice is blind. It is not deaf. I can expect to have the cases solved soon.

The stock market is a naturally born in the free economy and there is no natural reason for it to die now. So, albeit bitten so much, CSE still exists. The most interesting feature of CSE is that it is run by a group of never-frustrated people with an eye beyond horizon.

There is no doubt, at the moment the exchange does not have a vibrating market pivoting around it. In spite of that CSE's preparation goes on as if good days are ahead, possibly just knocking at the door.

CSE pioneered the on line trade in the country, offered state-of-the-art brokers' office automation software. The exchange runs four offices including head office. It has authorised an independent secretariat to run CSE. It has installed an Internet Trading module, conducted series of seminars to create awareness and now producing a TV serial for more powerful reach-out to the investors.

So far, all investments are without any vibrant result. Are all these investments in vain?

We can look back, but have to live in the present. What is the future, only time can say. If we focus on the present what are the complaints of CSE?

Investors' Confidence

A lie repeated and unanswered becomes truth soon. Investors lost their confidence in the stock market mechanism in 1996, everybody says repeatedly. But now there is a challenge to prove it to be wrong.

The primary market statistics shows that institutional investors as well as the individuals are keen to take part in the market. It is a lie to say that investors don't have confidence in the Share Market.

Of courses there is a peculiar thing. It is more or less universal that the primary market follows the secondary market. But the investors' confidence in the primary market in Bangladesh is leading the confidence in the secondary market, nullified all the bookish theories.

The primary market investors have to come to the secondary market today or tomorrow. There is no confidence in the market mechanism is a false statement. If there is a question of confidence, it is the governmental machinery that lacks it.

Government's Confidence

A lot to do in the market to tap its potential. But the key organisation that would reflect government policy, if there is any at all, is the Securities and Exchange Commission.

As this write-up is being typed, there is no SEC in Bangladesh. It is not a passing nonsense remark. Please see the books.

There has to be five members in the Commission, one of them will be chairing. Three members are required to form quorum. There is no chairman for the last three months and one member is out of office for last couple of months as he met a tragic road accident. So the commission does not exist.

It reflects government policy that the market is not that significant as the Bangladesh Bank, the National Board of Revenue or the Board of Investment or the Privatisation Commission. So what the CSE can do? Their investment has a high risk that it is going down the drain.

Market Capitalisation of Bangladesh Stock Market is about One Billion US Dollar.

To understand our size more meaningfully we can compare with some other markets.

Market Capitalisation of the Mumbai Stock Exchange is 41per cent of the Indian GDP. This is 11.98 per cent in Karachi and 9.93 per cent in Colombo. In Malaysia and Singapore it is 100 per cent. Market Capitalisation of CSE is 1.53 and that of DSE is 1.88 per cent of national GDP. Look at the bright side, what a great potential to grow the market in the market economy is there untapped in Bangladesh.

Thailand is often blamed for initiating the so-called Asian crisis of 1997. The ratio of the market capitalisation to Thai GDP fell below 5 per cent after the crisis. It agitated the government. After many bold and expensive steps taken, Thai government is now happy to see a remarkable growth in the market. Foreign investors are now over-subscribing Thai initial public offerings (IPOs) and Thai government is busy making regulations to ensure domestic participation first.

Wali-ul-Maroof Matin, Chief Executive Officer, Chittagong Stock Exchange