Recent Trends of Capital Market
Special Supplement
The Financial Express
May 10, 2007
CAPITAL MARKET IN BANGLADESH: SOME RECENT TRENDS
Courtesy by: AIMS of Bangladesh Ltd
The capital market
Bangladesh capital market is quite small compared to both other regional markets and to the size of its economy. Though generally a capital market has two prongs, the stock market and the debt market,
Bangladesh market has only stock market in active operation, as a debt market is still in its incipient stage. However, the stock market is also considerably small thanks to a conducive regulatory regime, lack of incentives and local business ethos. Since going public appears to be losing control over their creation by most of the entrepreneurs, who prefer running proprietary concern to corporatized public company, and as government fiscal measures act as a disincentive, few companies become interested to move to the capital market for raising capital. A proprietary concern may be taxed at individual rate, a private company at its double rate.
Among over 40,000 small and medium companies only 291 have become listed till April 30, 2007, of which 33 have been delisted in the past 15 years. Though the governments tried their best to attract the growing private companies to turn their enterprises into public limited and get listed to reap benefits and avail incentives offered time to time, on average only 10 companies have joined the market each year, and a large section of which is under regulatory compulsion.
Though industrialization has picked pace in Bangladesh almost three decades back, capital market has failed to attract the entrepreneurs as the key source of capital, which has usually been occupied by the banking system since beginning. That is why Bangladesh capital market has the lowest market capital as percentage of GDP in the region as well as other similar sized economies, as the following table shows, while its neighboring country India, sharing almost the same industrial
The Financial Express
May 10, 2007
CAPITAL MARKET IN BANGLADESH: SOME RECENT TRENDS
Courtesy by: AIMS of Bangladesh Ltd
The capital market
Bangladesh capital market is quite small compared to both other regional markets and to the size of its economy. Though generally a capital market has two prongs, the stock market and the debt market,
Bangladesh market has only stock market in active operation, as a debt market is still in its incipient stage. However, the stock market is also considerably small thanks to a conducive regulatory regime, lack of incentives and local business ethos. Since going public appears to be losing control over their creation by most of the entrepreneurs, who prefer running proprietary concern to corporatized public company, and as government fiscal measures act as a disincentive, few companies become interested to move to the capital market for raising capital. A proprietary concern may be taxed at individual rate, a private company at its double rate.
Among over 40,000 small and medium companies only 291 have become listed till April 30, 2007, of which 33 have been delisted in the past 15 years. Though the governments tried their best to attract the growing private companies to turn their enterprises into public limited and get listed to reap benefits and avail incentives offered time to time, on average only 10 companies have joined the market each year, and a large section of which is under regulatory compulsion.
Though industrialization has picked pace in Bangladesh almost three decades back, capital market has failed to attract the entrepreneurs as the key source of capital, which has usually been occupied by the banking system since beginning. That is why Bangladesh capital market has the lowest market capital as percentage of GDP in the region as well as other similar sized economies, as the following table shows, while its neighboring country India, sharing almost the same industrial