A hush of nervous anticipation hangs in the air as Grameenphone, the country's leading mobile phone opera tor, is about to float shares on the stock exchange by the end of this year
T he Grameenphone IPO is expected to be the largest in the history of Bangladesh's capital market.
But a question that lurks on the back of an investor's mind is whether the automated trading system of the premier bourse will be capable of dealing with the huge tsunami of shares that are about to crowd the market
An optimistic Dhaka Stock Exchange President Abdul I laque says: “Yes. We are working on upgrading the trading system.”
The upgrading process will significantly expand the capacity of trade volume that can take place, prior to the float of shares by the high rollers, such as Grameenphone.
The expansion is to be completed in two phases within the next six months, at an estimated cost of Tk 8.5 crore. The DSE will then be able to deal with 2,50,000 trades a day, up from 1,00,000 trades now. On an average day, DSE witnesses 50,000 to 60,000 a day.
As part of the uplifting programme, the DSE has already bought two processors to add to the existing two.
"In the first phase, the capacity of trade volume will be raised to 1,50,000 a day and will be completed in three months,” Haque said in an exclusive interview with The Daily Star It would be wrong to think that the upgradation of the bourse was in response to the announcement of the float of shares by the big companies alone. This move was much needed, following several DSE's server system failures in the past few months, to the sufferings of investors.
A recollection of the events that took place on August 21, when trading had remained suspended for one hour due to technical glitches, will highlight the issue. Also, the worst came on March 2, when trading had remained suspended for more than four hours due to a technical fault in automated transactions.
Such acts of improvement will remove the fears among investors, says Haque, also chairman of Royal Green Securities.
The DSE last underwent an overhaul about three years ago. August 10 of 1998 marks that day that the automated trading system was set up on the premier bourse and the system has since been running based on TANDEM NonStop K204 System (mainframe server), which Is fault-tolerant, available, scalable and maintainable.
The system software used is HP proprietary NonStop Kernel and the database is NonStop SQL, which handles database functionality successfully. The central trading system, being on the stock exchange premises, runs 24 hours a day, 365 days a year. The application software named TESA (The Electronic System Architecture) was developed on 32-bit application architecture for the global securities markets. It has high processing speed, high message integrity and fully automatic recovery.
The automated trading system overhaul was also necessary in line with the DSE's branch network programme.
"We are expanding our branch network throughout the country. Our first target is to establish DSE branches in all the divisions by next year,” he says.
Currently, the DSE is working to set up a branch office in Khulna, while it already has branch offices in Sylhet and Chittagong.
Asked whether it was possible to raise funds from the stock market to construct the country’s largest civil engineering project, Padma Multipurpose Bridge, the DSE president says, “Why not? Different multinational donor agencies, including the World Bank and Asian Development Bank, have expressed interest."
" It is a profitable project and our stock market is always ready to finance any profitable project."
However, implementation of the project and investment proposals should be made from a professional point of view, Haque says. "Any unprofessional approach may hamper scope for raising capital from the stock market. ”
The government recently disclosed plans to raise part of the fund required to construct the Padma Bridge, from the stock market. Apart from external financing, the government will have to collect around Tk 4,000 crore from internal sources.
Haque says both local and foreign entrepreneurs can raise funds from the stock market to set up new industries or expand their businesses in Bangladesh.
Asked why all the manufacturing companies are not listed on the stock market, he said the main reason behind the unwillingness is psychological'.
Entrepreneurs feel it is a hassle to list their companies on the stock exchanges, he points out. "We are continuously trying to encourage them to list their enterprises on the stock exchange,” he says.
Differing with the recent market slump, the DSE president says there is no evidence that the market is witnessing a bearish trend, rather a slow pace is seen. "The overpriced securities are being transacted cautiously that casts an impact on other scrips too. Besides, the institutional investors are also not rearranging their portfolios with fresh investment,” says Haque, explaining the slow pace in the market.
The DSE president says the problem arises as investors, especially retailers, make investment decisions based on rumours rather than company fundamentals, making their investments risky. "Investors should know the basic fundamentals of the company and then invest in a professional manner,” he suggests.
Haque says Bangladesh’s capital market is highly prospective, as its depth increases by the day and the transactions in terms of value and volume are increasing. New investors enter the market with fresh investments, everyday.
"Our market management system is transparent, modern and automated. The rate settlement is almost hundred percent. So, our market is totally ready to finance the big_ industries and infrastructures. The government and both the local and foreign entrepreneurs can raise necessary funds from the market any time.”
sarwar@thedailystar.net