Crafty game?
Photo: Amdadul Huq / Driknews
Thanks to our Dhaka Stock Exchange new President for his powerful strides to bail out our capital market from the vicious cycle around Z category shares wrought about by some crafty wrong doers. Z category shares transaction in percentage of our total turnover may not be that high. But the damage caused by it goes much deeper down the spine of our capital market system. It has produced such satire in our capital market that sounds as it were: Invest in bad shares and be rewarded. Invest in good shares and be punished. This hints at decaying of intrinsic value in our capital market system. Let's search where the roots of this problem stem from. Ours is a market with lot of low paid-up capital based shares. Z category shares are among them. And our regulation allows any investor to hold unto 10% shares of any listed company both high and low capital based. So a limited number of investors can thus join together to make an inner circle of their own to buy the vastly major chunk of free-float shares of any of these low capital based companies with their limited buying power added together. And then the fabulous game of price fixing bonanza they embark on within their inner circle thereby raising prices of these low capital based shares to any height they deem fit with complete disregard to their performance/fundamentals. This is the craft! And this is the foul game that our capital market is riddled with today! They have now targeted low capital based companies other than Z category for the same game. It stands to reason: Our regulatory body and bourses need to strike at the root cause. And the root cause is: Our low capital based companies get into fold of a limited number of hands. Our vast majority of investors evaluate this as a problem which can be tamed with steps such as: Lower the percentage of free float shares up to which any investor can hold in any low capital based company. It will spread shares of these low capital based companies among larger number of investors whereby guarding against their concentration in limited hands. I want to underscore that our present system allows any investor to hold up to 10% share of any company both high and low capital based. Surveillance is touted as a tool of control for such foul games in our capital market. But let's be honest about it: what result surveillance is delivering in real terms? It is in everybody's knowledge. A pragmatic approach to the subject, please allow me to say, is: it is the system that should control. Surveillance will compliment the system. May the authorities, regulatory body and bourses, come forward to crack down on these foul games.
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