Stock market unlikely to reopen in May

Despite having extended their closure up to May 30, in line with the general holiday, both stock exchanges of the country might reopen before that if the securities regulator instructs them to do so.

The bourses in both Dhaka and Chattogram announced this in separate press statements on Saturday.

However, according to observers, this is very unlikely as of now because the Bangladesh Securities and Exchange Commission (BSEC) itself is not in a technical position to decide such a thing due to a temporary vacancy in four of its top five posts.

Both the stock exchanges had extended their stretched closures till May 14, before the government extended the general holiday.

At the beginning of the shutdown, the Chittagong Stock Exchange (CSE) decided to follow the government holiday. It is planning to stick to that decision until the bourse receives BSEC instructions on reopening before the holidays end.

However, after a six-week closure, the Dhaka Stock Exchange (DSE) decided to reopen from the second week of May in response to rising criticism from a group of local and foreign investors and market intermediaries who demanded liquidity – the opportunity and ease to buy or sell.

The capital city bourse wrote to BSEC for its instructions on resuming stock market activities amid the general holiday – which also needs a technical exemption from various regulations.

However, as the government circular of the general holiday did not include the capital market among the list of emergency or essential services, the securities regulator passed the matter to the Ministry of Finance.

The finance ministry has been in discussions with the Ministry of Public Administration to determine whether the capital market should be treated as an essential sector.

Meanwhile, the securities regulator recently became unable to conduct its commission meeting as all posts, except one of its top five officials, are vacant right now.

The BSEC is in need of a commission meeting if it wants to exempt the exchanges from some regulations to operate in the unprecedented circumstance of the public health emergency and the general holiday.

Finance ministry sources said last week that the government is in a process of appointing new officials at the BSEC top posts.

However, their appointment, joining dates, conducting the said commission meeting, and then reopening of the stock exchanges with extraordinary measures – during general holidays – seems very unlikely as there are an insufficient number of working days ahead.

BSEC Executive Director and spokesperson Md Saifur Rahman said that they are waiting for two things – the finance ministry's instruction and for the incumbent top officials at the BSEC who would conduct the commission meeting.

The nation is going to enter Eid holidays soon, leaving only four working days before that.

Bangladesh, Sri Lanka, Jordan, and the Philippines are some of the few countries who have kept stock exchanges shut for the time being – in response to the pandemic and selling pressures.

Each of the countries, except Bangladesh, have already returned to market activities.

The reputation of Bangladesh, internationally, is already at significant risk as some of the foreign portfolio investors have already been very vocal against the extended closure.

Some of them have also criticised the pre-shutdown floor price setting as that significantly reduced liquidity. However, a large group of investors has welcomed the emergency measure that helped the market avert a further fall from its existing low-price level – a consequence of a long lasting bearish market.