Defying all bleak prognostications the country's capital market remained relatively unaffected by the financial turmoil and became bullish during the most part of 2009 until the present day not just because of investor confidence boosted by a number of regulatory reforms and strict market monitoring; the perception of underutilized market potential also played a great role. Whatever nervousness was witnessed in the mean time was mainly due to the cyclic pattern of loss and gains that characterizes almost every healthy market. But that does not make room for relaxation in vigilance.

To further strengthen the market base the SEC (Securities and Exchange Commission) has recently issued a directive forbidding merchant banks to give loans to any newly listed company, or to any company that has had its category changed, within the period from the first day of transaction to the 30th transaction day. For its part the DSE (Dhaka Stock Exchange) has made it obligatory for a company to have Tk 500 million as its minimum paid-up capital in order to get listed.

The bulk of the profit growth, about 30% on average, registered by the financial institutions, both banks and non banks, during the 1q of the current fiscal year is due to capital market operation. However, merchant bank wings and brokerage houses will have to emerge as separate identities by January 2010, according to a Bangladesh Bank circular. This will eliminate any risks for depositors that may result from banks' investment in the capital market, experts believe. Meanwhile SEC is considering preparing guidelines for merchant banks to follow after they have been established as subsidiaries.

A new chapter was opened in the history of the country's capital market with the entry of Grameenphone, the largest ever corporate house to get listed, invigorating the market on a scale never before experienced. Euphoria marked the occasion of Grameenphone shares trading for the first time on 16 November, DSE General Index rising to a record 4148.12 point. Altogether 7,43,400 shares, each with Tk 10 as face value and Tk 60 as premium, were transacted, per share value soaring to Tk 195 at one stage. Through IPO (initial public offering) and PPO (pre-placement offer), Grameenphone now has on its list 316,496 new shareholders.

The robust health of the DSE with 1000 billion plus taka market capitalization on average (more than 1,048 billion taka as recorded on 17 November) explains why it is possible for the government to raise $10 billion from the capital market phase by phase to fund new power projects. And with Grameenphone making its debut, the stage is now set for others to make their entry.

ET Report