Daily Sun-20 March,2012 Tuesday
The stock market is stable at present. Upward and downward movement of share prices is quite usual. The investors must have clear idea about capital market and they should raise their awareness level. If an investor depends on bank borrowings, then he or she will be loser at the end.
Nearly, Tk 1.50 billion has already been invested in the share market by NRBs (non-resident Bangladeshis) in February. But our local investors are still sleeping. Our investors will investment their funds when share prices will skyrocket, Captain Moazzem Hossain, Chairman of e-Securities said at an interview with ETV presenter Hero Zummon.
The following is the details of the interview.
* Do you think some shares are under priced?
# Yes, banks are still trading their shares at low rates. Some fundamentally strong shares are trading below the rates. Investors should always invest for long-term. Then it will be easy for them to gain.
* How qualified are the new DSE office bearers for the job? What do you expect from them?
# I felicitate the newly elected committee of DSE through ETV. They have taken right steps at the right time. They have selected proper persons for this crucial job and according to the expectations of investors. Rakibur Rahman is well qualified for the job. Earlier, he took a number of positive steps for the market. He can take more steps to stabilise and enhance the quality of the market.
* During his previous tenure as DSE president, he boldly declared that sponsor directors must hold 2 percent shares individually and collectively 30 percent shares of their respective companies. And they must not be allowed any concession. Do you think it will help the market turn positive?
# Of course. Sponsor-directors must buy back their shares. This is really a positive step for the market. I hope they will not get any advantage from this. They must hold 30 percent cumulative shares.
* AGMs are near at hand. May we hope any positive changes there?
# Yes, there will be mixed situation in the boards. New faces will replace old ones at the boards.
* Experts have opined that transparency will prevail in the market when culprits are punished instantly. What do you think about transparency and accountability?
# At first, you should detect the anomalies. Here the word punishment is not appropriate. After disclosure of the anomalies bring him to book if the law permits. You should monitor the whole situation and try your best to control the corruption.
* SEC is thinking of investing IPO money in three categories - associate, subsidiary and sister concern. They are trying to find out in which way the money will be invested. Which system do you think is applicable?
# The SEC law clearly mentioned which way will IPO money be invested. SEC is also thinking of adding some clauses to the law. This must be done after taking the opinion of the general investors and in consultation with SEC. Besides it will not be legal to use the IPO money otherwise from the designated sectors.
* Question through telephone: Everyday, we are hearing that sponsor-directors should possess individually 2 percent and cumulatively 30 percent shares. How can we know that they are buying shares? Will the market improve if they buy back shares?
# Sponsors must possess 2 percent shares to become director and total sponsors should hold 30 percent. This is the law. If they declare to buy shares before 30 days it is good but if one cannot buy shares at the existing rates due to fund constraints then he or she must declare 15 days ahead. I hope there will be no problem.
* Before buying shares of any company, it is important to know the PE ratio and EPS of any company for previous five years. It denotes the strength of a company.
# Some companies downplay their PE ratio but overprice EPS. I think, external audit firms are not maintaining international standard. Audit reports of most of the companies are not transparent. Some of the companies inflate their earnings. If you challenge audit report of any company you can unearth the reality.
* The newly elected DSE president said transparency and accountability of financial reports of any company could be maintained if it was audited by international auditors. What do you think?
# We can boycott those audit firms which never maintain transparency and accountability. There should be a list of audit companies who have minimum international standard capacity and re-audit should be done by the SEC. I personally thank SEC for the initiative to re-audit the financial reports of a company. Transparency will not be established if check and balance is not maintained properly.
* Here you are indicating PE ratio. On the other hand EPS is also an indicator of a company's performance.
# Both indicators are related and NAV is also another point for assessing a company's financial health, because some company's NAV may be Tk 15 but in the market it is Tk 150. If earning shows Tk 5 or Tk 6 it does not give us the real picture of a company. And some company's NAV is Tk 40, its market value is also Tk 40. How surprising this is. Now, NRBs are investing in stocks but not general investors. Merchant banks are about to die because of fund shortage as they had to borrow from banks.
* Do you think soft loan from Bangladesh Bank could help overcome the liquidity crisis? Will Bangladesh Bank consider the proposal?
# Policymakers of Bangladesh Bank should think of it first. They allow soft loans for agriculture sector or to develop various sectors allowing package loans. Some are interest-free loans. Merchant banks and some brokerage houses are suffering from liquidity crisis. At this moment, if Bangladesh Bank comes forward to assist them with an amount of Tk 10 billion, then merchant banks and brokerage houses will be on their feet and the investors will be the gainers.
* The government has decided to waive 50 percent interest from margin loans but some raise the question as to how merchant banks and brokerage houses will do the jobs. How will they be subsidised. Do you have any guideline in this regard?
# No. The government or the SEC is yet to mention any particular guideline in this regard. How merchant banks will maintain their funds is yet to be mentioned. The way out is not clearly mentioned. So, it will be very difficult to execute the process.
Nearly, Tk 1.50 billion has already been invested in the share market by NRBs (non-resident Bangladeshis) in February. But our local investors are still sleeping. Our investors will investment their funds when share prices will skyrocket, Captain Moazzem Hossain, Chairman of e-Securities said at an interview with ETV presenter Hero Zummon.
The following is the details of the interview.
* Do you think some shares are under priced?
# Yes, banks are still trading their shares at low rates. Some fundamentally strong shares are trading below the rates. Investors should always invest for long-term. Then it will be easy for them to gain.
* How qualified are the new DSE office bearers for the job? What do you expect from them?
# I felicitate the newly elected committee of DSE through ETV. They have taken right steps at the right time. They have selected proper persons for this crucial job and according to the expectations of investors. Rakibur Rahman is well qualified for the job. Earlier, he took a number of positive steps for the market. He can take more steps to stabilise and enhance the quality of the market.
* During his previous tenure as DSE president, he boldly declared that sponsor directors must hold 2 percent shares individually and collectively 30 percent shares of their respective companies. And they must not be allowed any concession. Do you think it will help the market turn positive?
# Of course. Sponsor-directors must buy back their shares. This is really a positive step for the market. I hope they will not get any advantage from this. They must hold 30 percent cumulative shares.
* AGMs are near at hand. May we hope any positive changes there?
# Yes, there will be mixed situation in the boards. New faces will replace old ones at the boards.
* Experts have opined that transparency will prevail in the market when culprits are punished instantly. What do you think about transparency and accountability?
# At first, you should detect the anomalies. Here the word punishment is not appropriate. After disclosure of the anomalies bring him to book if the law permits. You should monitor the whole situation and try your best to control the corruption.
* SEC is thinking of investing IPO money in three categories - associate, subsidiary and sister concern. They are trying to find out in which way the money will be invested. Which system do you think is applicable?
# The SEC law clearly mentioned which way will IPO money be invested. SEC is also thinking of adding some clauses to the law. This must be done after taking the opinion of the general investors and in consultation with SEC. Besides it will not be legal to use the IPO money otherwise from the designated sectors.
* Question through telephone: Everyday, we are hearing that sponsor-directors should possess individually 2 percent and cumulatively 30 percent shares. How can we know that they are buying shares? Will the market improve if they buy back shares?
# Sponsors must possess 2 percent shares to become director and total sponsors should hold 30 percent. This is the law. If they declare to buy shares before 30 days it is good but if one cannot buy shares at the existing rates due to fund constraints then he or she must declare 15 days ahead. I hope there will be no problem.
* Before buying shares of any company, it is important to know the PE ratio and EPS of any company for previous five years. It denotes the strength of a company.
# Some companies downplay their PE ratio but overprice EPS. I think, external audit firms are not maintaining international standard. Audit reports of most of the companies are not transparent. Some of the companies inflate their earnings. If you challenge audit report of any company you can unearth the reality.
* The newly elected DSE president said transparency and accountability of financial reports of any company could be maintained if it was audited by international auditors. What do you think?
# We can boycott those audit firms which never maintain transparency and accountability. There should be a list of audit companies who have minimum international standard capacity and re-audit should be done by the SEC. I personally thank SEC for the initiative to re-audit the financial reports of a company. Transparency will not be established if check and balance is not maintained properly.
* Here you are indicating PE ratio. On the other hand EPS is also an indicator of a company's performance.
# Both indicators are related and NAV is also another point for assessing a company's financial health, because some company's NAV may be Tk 15 but in the market it is Tk 150. If earning shows Tk 5 or Tk 6 it does not give us the real picture of a company. And some company's NAV is Tk 40, its market value is also Tk 40. How surprising this is. Now, NRBs are investing in stocks but not general investors. Merchant banks are about to die because of fund shortage as they had to borrow from banks.
* Do you think soft loan from Bangladesh Bank could help overcome the liquidity crisis? Will Bangladesh Bank consider the proposal?
# Policymakers of Bangladesh Bank should think of it first. They allow soft loans for agriculture sector or to develop various sectors allowing package loans. Some are interest-free loans. Merchant banks and some brokerage houses are suffering from liquidity crisis. At this moment, if Bangladesh Bank comes forward to assist them with an amount of Tk 10 billion, then merchant banks and brokerage houses will be on their feet and the investors will be the gainers.
* The government has decided to waive 50 percent interest from margin loans but some raise the question as to how merchant banks and brokerage houses will do the jobs. How will they be subsidised. Do you have any guideline in this regard?
# No. The government or the SEC is yet to mention any particular guideline in this regard. How merchant banks will maintain their funds is yet to be mentioned. The way out is not clearly mentioned. So, it will be very difficult to execute the process.
