How ethical are the BSEC roadshows!
Sanjay Adhikari || BusinessInsider
BSEC Logo. UNB File Image.
Bangladesh Securities and Exchange Commission (BSEC), the capital market watchdog, has been organising roadshows around the world to attract foreign investments in the stock markets.
In doing so, BSEC is soliciting sponsorships from companies that are listed with the bourses or have indirect involvement in the markets.
For example, Walton, which is a listed company, was one of the sponsors of BSEC roadshow in the USA last month. In February, the Dubai roadshow was also financed by some other listed companies.
The BSEC team is now in Switzerland with the third roadshow, which is sponsored by bKash and Nagad, which are not listed on DSE, but BRAC Bank, which is a listed company, has majority shares in bKash.
As a result, market analysts have questioned the ethical ground of such roadshows as has raised a question over ‘conflict of interest’.
“The regulator’s task is not to promote capital market. The government has many more institutions to do this. If someone were to conduct promotions of our capital market, the stock exchanges are the appropriate bodies to do it,” said Faruq Ahmed Siddiqi, former chairman of BSEC.
He questioned such sponsored roadshow. What does the regulatory body do when it travels abroad with the money of the listed companies?
“If the regulatory body gets tour sponsors from the listed organisations, then there would be a conflict of interest arising in regulating these organisations, which is not acceptable in any way,” Faruq said.
The current commission has held road shows in three countries so far. The first road show took place in Dubai of United Arab Emirates during February 9 to 12.
This was followed by another expo in the United States from July 26 to August 2. The week-long promotions ran in four cities across the US.
Then the three-day roadshow was held in Switzerland from September 20. Each road show highlighted Bangladesh's economic potential, investment, trade, Bangladeshi products and services, the stock market and the bond market before the expatriate Bangladeshis as well as foreign investors.
Apart from the BSEC chairman and top officials, officials of the Ministry of Finance, Investment Development Authority, two stock exchanges, various listed companies as well as media personnel also accompanied such unconscionable roadshows.
BSEC has plans to organise such demonstrations in many more countries ahead.
However, it could not been known whether foreign investment in the capital market has increased or not at all as a result of holding such road shows.
“BSEC does not store any information on foreign investment in the secondary market,” said Rezaul Karim, executive director and spokesperson of BSEC.
He said he was unable to say how much money was spent on these road shows and who bore the cost.
Stock exchanges store detailed information of foreign investors. However, Shafiqur Rahman, the public relations officer of the country's main capital market DSE, could not disclose the total investment of foreigners in the country's capital market and the percentage of their market capital.
“We have published the net transaction data of foreign investors until 2019. Since then, the BSEC has issued an unwritten ban on the disclosure of such information. However, the total turnover of foreign investors in 2020 was Tk 10,387 crore, which was Tk 7,845 crore in the previous year,” Shafiqur Rahman told the Business Insider, Bangladesh last week.
“Foreign investment in a country's capital market actually depends on how well-governed is the market. In a market where questions galore about the published audit reports of the companies, about their AGMs, where regulators remain silent even after a cycle of profiteering by manipulations of the share prices, foreign investment will not come in that market,” said Prof Abu Ahmed, a capital market expert.
He said, on the contrary the investors may lose confidence.
Mohammad Helal, another capital market critic, agreed.
He said foreign investors will check thoroughly all relevant information before investing in Bangladesh’s capital market.
Helal said foreign investors must raise questions about the nefarious roadshows that took place and are taking place. After learning all this they would make decision whether they would invest or not.
Frequent needless foreign trips by officials of various government organisations have spawned criticism in Bangladesh. Most of these trips turn into pleasure trips for officials. Although the government spends crores of taka, it benefits the general people a little.
If the results of subsequent foreign trips in the name of roadshow is zero, experts say, it would be slanderous for the regulatory body.