Finance Minister dismisses fear of 96 like stock market debacle

Finance Minister Abul Maal Abdul Muhith dismissed confidently the fear of 1996 like stock market debacle and categorically disagreed with the contention that the current market was overheated.

“I do not think the 96 like debacle is going to repeat,” the
finance minister said at a meeting with the members of Economic
Reporters’ Forum (ERF) in the city.

The minister made this comment on the day when price index at Dhaka Stock Exchange (DSE) crossed 7700-point mark, reaching a
new high at the closing of the week’s opening session.

Earlier, Dhaka and Chittagong stock exchange authorities cautioned that the market was highly overvalued and would collapse anytime unless the government offloads some good shares from state-owned enterprises (SOEs).

Muhith admitted that the recent growth of stock market was too fast, but did not agree with the suggestion that this faster growth was a sign of overheated market.

“This is a too much bullish market and needs to be stabilized with increased supply of scrips,” he said.

The minister, however, did not say when and how the government would offload shares from SOEs, but added the government was fully aware of the situation and would take steps to gradually stabilize the market.

“The stock market is so sensitive that any hurried decision
would make it volatile,” Muhith explained.

He referred to the recent steps of the Securities and Exchange Commission (SEC) to ease rules and regulations to encourage more companies issue IPOs (initial public offerings).

The finance minister also spoke of the economic performance in the first quarter of the current 2010-11 financial year.

He said the data for July-September would be finalized in next 10 days when it would also be made public.

According to the provisional data, he said export and import showed positive growth when remittance declined.

He said the foreign exchange reserve was still at a very comfortable position to meet six-month import cost.

Muhith noted the increasing inflation as major concern and
assured more subsidies to keep commodity prices at affordable
level.

The subsidies would create extra pressure on budget, the
minister said, but expected that the improving economic condition
would cushion the additional load.

Citing the trend of global economic recovery in different
countries, he expected Bangladesh would get rid of the recession
fallouts by the end of next June.

Identifying the energy sector as a major hurdle to the
faster economic growth, Muhith said the power situation would
considerably be improved by December, though the demand-supply
gap would not be matched until adequate number of bigger power
plants comes into operation.

DHAKA, Oct 24 (BSS)

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