Monday, October 21, 2019 | ePaper
Investors losing interest in stock market
Meanwhile, share prices have been going down due to the ongoing liquidity crisis of financial institutions. These institutions don't want to invest in the market now as they fear further "pressure" in the coming days. The asset quality of banks is questionable, and their operating cash flow is also very low, which will ultimately put more pressure on liquidity. It is only by solving the liquidity crisis by ensuring good governance that banks will find it possible to invest. The financial sector, especially banks and non-bank Financial Institutions (NBFIs) has been facing severe liquidity crunch since February 2018. Banks and the NBFIs are the drivers of the stock market but they have been plagued by rising nonperforming loans (NPLs), scams and lack of governance. NPLs stood at Tk 112,000 crore or 11.50 percent of the total outstanding loans. If rescheduled and written-off amounts are included, the stressed assets of banks would be around 20 percent of the total loans.
Also lack of quality stocks is a key reason behind poor participation of investors in the stock market. If the government fails to bring reputed local and multinational companies to the market, it will be difficult to restore the investors' confidence. Foreign investors are also selling off shares over the last few months due to confidence crisis and the tussle between the Telecom Regulator and Grameenphone over audit claims.