WE are happy to know that the Bangladesh Bank (BB) expressed its concern about the high cost of IPO so as to facilitate the access of corporate houses to the capital market. Certainly it is an encouraging and necessary initiative to reduce IPO cost which varies from 3.0 per cent to 8.0 per cent of the issue size. Such cost comprises of fees and charges of BSEC, Stock Exchanges, CDBL, Underwriters, Issue Managers, etc. and printing and stationery cost. There is enough scope to reduce it. It is commonly alleged that a portion of this cost is taken out by the issuer for some mysterious expenses in the name of IPO cost. This needs to be addressed and justified. But the BB's views about market stability appear to be away from reality.
DSE Index in June 2015 was 45831. During 2015-16 fiscal, a total of 22 new issues were added to the stock market. Besides, quite a few companies issued bonus shares and some issued right shares. So logically index should rise even if the price level of existing shares remains flat. But it reduced to 4507 at the end of June 2016. As such market capitalisation also reduced. So arithmetically market capital to GDP ratio should increase (as denominator decreased). But it declined to 14.68 per cent from 15.04 per cent. So the statistics published in support of BB do not conform to its views on market stability. On the contrary, market is continuously going down amid continuous bleeding from the old wounds of the investors. The fact should be recognised by all concerned, otherwise proper diagnosis will not be possible for remedial measures.
Abul Hashem Khan
Ex-Deputy Managing Director
Dutch-Bangla Bank Ltd.
