Stockbrokers yesterday urged the government to take necessary steps for the listing of all state-owned enterprises (SOEs) and offloading government stakes in multinational companies (MNCs) through direct listing to revive the lacklustre stock market.

Direct listing is a process where a company, instead of issuing new shares in an IPO, lists its existing shares on a stock exchange, allowing current shareholders to sell their shares to the public directly, without involving underwriters or raising new capital.

The DSE Brokers Association of Bangladesh (DBA) made the requests through a letter sent to the chief adviser of the interim government.

There are many well-governed, large MNCs that have been playing a big role in Bangladesh's economy for a very long time, some of them for a hundred years, mobilising the country's infrastructural, financial and human resources, it said.

"This is the right moment for the nation to assert our national interests and persuade them to get listed on the capital market for a fair price and share the company's potential with people of the next generation," it said.

The country has numerous profitable state enterprises and their listing will increase the supply of quality stocks, the brokers said

There are companies taking profits out of this country and it is fair to ask them to share their franchise with the countrymen, the DBA said.

"We request an appointment with you (CA) to explain the current state of the Bangladesh capital market and its future prospects," it said.

The country has numerous profitable SOEs in commercial and infrastructural sectors and their listing will increase the supply of quality stocks, helping to create a balance between supply and demand, it added.

This would create an environment that is attractive to new investors with long-term orientations, which would primarily address liquidity issues in the market, said the DBA.

A large number of fundamentally sound stocks may create resistance against market manipulation and speculation tendencies, helping to promote long-term investment, it said.

The SOEs would be subject to more scrutiny by investors and market intermediaries for their activities and corporate actions, improving their accountability framework and resulting in better governance, it said.

"By bringing those companies together, we could create a vibrant market environment that would help the local conglomerates reduce their dependency on debt financing from the banking system," said the DBA.

"…and shift to alternative long-term sourcing of funds, raising equity capital from the public market, eventually deleveraging and de-risking the financial system."

Regarding the current situation, the DBA said the Bangladesh capital market has experienced extreme bubbles and bursts, misgovernance, untenable leverage, and institutional failures for the past 15 years.

These have resulted in persistent negative actual returns and capital erosion, shrinking the market by around 40 percent in real terms, it said.

"Sadly, the number of registered investors in the market has fallen to 17 lakh from 33 lakh, primarily due to the shortage of good companies that can generate real value for investors," it said.

"Most notably, thousands of crores of taka have been looted from the market through the listing of bad or namesake IPOs, which, in turn, created a permanent loss of confidence and a liquidity crisis in the market."

By manipulating the share prices of these bad companies, the capital originating from the savings of ordinary investors was siphoned away, it said.

The DBA and the DSE stockbrokers' community have repeatedly spoken against these listings and warned ordinary investors against investing in low-quality companies.

However, investors have turned to substandard or low-quality stocks as part of a market-wide speculation spree, further damaging their funds and investments, it said.

All that happened due to a lack of supply of high-quality large capital stocks and an oversupply of low-quality stocks, among other reasons. This necessitates bringing high-quality IPOs to the capital market as soon as possible, it added.

"Should we fail to come out of this crisis soon under your leadership, we will lose an excellent opportunity to turn the market around, bring discipline to it, and create an environment for entrepreneurs and the state to raise capital," it said.

This will not only help expand business or infrastructural projects for the nation but also build the economy and enable employment generation, said the DBA.

Copies of the letter were sent to Finance Adviser Salehuddin Ahmed, Chief Adviser's Special Assistant Anisuzzaman Chowdhury, and BSEC Chairman Khondoker Rashed Maqsood.