The Bangladesh Bank has expected that the country’s capital market would be vibrant soon as the central bank along with the Bangladesh Securities and Exchange Commission has taken a number of policy supports aiming at ensuring stability on the market by the way of providing liquidity support.
The BB came up with the expectation in its monthly report on the country’s capital market for the month of October.
The central bank report was released at a time when the BSEC sought fresh monetary support from the central bank to revive the ailing market.
The BSEC placed the proposal to the BB as the key index of Dhaka Stock Exchange, DSEX, lost 271 points in the September 16-November 22 period after climbing to 5,116 points on September 16 from 3,604 points on March 18.
On November 12, the BSEC sought Tk 15,000 crore from the BB to revive the country’s capital market.
The BB in its report said, ‘To push upward the ailing capital market BB has issued a guideline regarding equity exposure which already taken or to be taken by banks involved in the private sector infrastructure projects or project related companies.’
‘Now, special purpose vehicle, alternative investment fund or any fund similar to these funds approved by the BSEC can be used by the private sector in power and energy, tourism and digital infrastructure projects or project related companies which have already been adopted by banks in order to create market liquidity, increase the quality of investment and reduce risk of the equity exposure of banks,’ it said.
‘An expansionary monetary policy has been announced by the BB for the fiscal year 2020-21 aiming to speed up recovery of the pandemic-hit economy,’ it said, adding, ‘To overcome the challenges posed by the COVID-19 pandemic, the BSEC has brought a number of changes in its regulatory policy aimed at developing the capital market and restoring investor confidence.’
‘With these positive policy supports, currently we have been seeing some recovery in the stock market which gives us hope for a vibrant capital market soon,’ the central bank said.
Following prolonged depression on the market for more than one year, the BB in February this year allowed banks to form Tk 200-crore special fund each by taking low-interest loans from the central bank to invest in the stock market.
Though the policy supported the stocks investors to regain confidence in the market, the outbreak of coronavirus in the country and subsequent imposition of shutdown across the country hit the stock market hard, pulling the key index of the Dhaka Stock Exchange down to a seven-year low on March 18.
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