Propaganda against mutual funds and asset managers

(They are strategically trying to destroy the institutional investment capacity of the market.)
A vested interest group is trying to destroy the institutional investment capacity of the market through the implementation of the Mutual Fund Rules-2025, and some unscrupulous officials of the BSEC are fueling them. The speakers complained at a seminar organized by the Bangladesh Mutual Fund Investors Unity Front at the Capital Market Journalists Forum (CMJF) office in Bijoynagar, the capital, on Saturday (June 20).
They claimed that if the rules are implemented, the country's closed-end (term) mutual fund sector will be destroyed and the overall capital market may be negatively affected. In this situation, they have sought the intervention of the Finance Minister to reconsider the matter.
Ganesh Roy, the organizing secretary of the Mutual Fund Investors' Unity Front, who participated in the event, expressed his anger and said, "Recently, many people are spreading misinformation that mutual fund asset managers in Bangladesh do not pay dividends properly to investors." Which is completely baseless. He said that among the asset managers, only Reis Asset Management has paid dividends of over Tk 2000,000 crore so far. Which is much higher than the dividend yield of other large listed companies in the market. Then it is understood that a certain group is running various types of propaganda against asset management companies to destabilize the mutual fund market. He also said that such propaganda is harmful not only for mutual funds but also for the overall capital market. He specially requested investors not to listen to such propaganda.
Mehdi Farhan, general secretary of the Capital Market Investor Forum, alleged, "Despite the fact that 100% of the assets of most term mutual funds in the capital market are safe with the custodian, some dishonest BSEC officials, along with some shady market players, are continuing to spread propaganda about the loss of fund assets." In addition, the custodian of the term mutual fund is ensuring that 100% of the assets of the term mutual fund are protected, and news regarding this was published in the country's first-class national daily. He also said that despite the theft of thousands of crores of taka from the country's renowned banks in the past few years, the banks have continued their operations due to unseen reasons. The banks include AB Bank, National Bank Limited, ICB Islami Bank Limited and Premier Bank, among others. But despite the mutual fund assets being 100% protected, the Bangladesh Securities and Exchange Commission is conducting harassing activities in the name of various inspections and inquiries, preventing asset managers from managing their funds properly and normally. This is harming both the funds and the investors.
Mutual Fund Investor Unity Front President M. Zahurul Haque said, if these rules are implemented, assets worth Tk 30,000-40,000 crore will be permanently lost from the stock market. 90 percent of mutual funds are invested in 'A' category shares, such as Grameenphone, BatBC, BRAC Bank, Renata, the market value of leading companies will collapse. There may be a 50% decline in the share price of all 'A' category companies.
He also said that if all mutual funds or a few large mutual funds are converted or redeemed together, there will be a lot of selling pressure in the market. Due to selling pressure, the prices of other shares in the market will decrease, negatively affecting the portfolios of investors. The value of their investments will fall close to zero. Ordinary investors will be at risk of losing up to 70-80% of their investments. If there is a sudden fall in market prices, it will create a chain reaction. If the stock market price falls, the brokerage houses will forcefully sell the shares of investors who have purchased shares on margin, leaving investors with no choice but to step in. This will affect not only asset management companies, but also all companies in the capital market, including brokerage houses, trustees, custodians.
Md. Mehedi Bin Said, International Affairs Secretary of the Bangladesh Capital Market Investors Association, who participated in the seminar, said that if mutual funds are forcibly liquidated or converted, all the people working in this sector will lose their jobs and they will not be able to find jobs anywhere else. We are being given hope that foreign investors will invest in Bangladesh, but after reviewing the market decline that will occur if mutual fund redemptions or conversions are made, no foreign investor will invest in Bangladesh. Foreign investors will invest only when they see a market that is continuously growing and improving. New products are coming to the market, such as ETFs and derivatives, but without bringing them, when important products like mutual funds are being removed from the market, the market will not be attractive to foreign investors. A large amount of mutual funds' assets are invested in the banking sector. Mutual funds have kept a large amount of their assets in the form of FDRs in various banks. They also have a significant amount of investment in bank bonds and other banking sector-based financial instruments. Currently, the banking sector is in a very shaky state. In such a situation, if the redemption or liquidation of the funds is done, then additional pressure will be created on the banking sector.
Banks will not be able to return the money on time; as a result, ordinary depositors will also face problems in withdrawing their money. It will not be possible to sell the shares of the 5 banks whose shares have been nullified; as a result, mutual fund investors will also not get their money back. The impact of this will not be limited to weak banks; rather, strong banks will also be affected by the pressure on liquidity and cash flow. In the end, the common people will have to pay the price if this crisis is to be resolved.
He added that the law on conversion/redemption of term funds and the recently published gazette do not mention any specific time limit for the return of investors' money. He expressed his fear that investors will face problems in getting their money back and will get less money back than expected. He called on the Bangladesh Securities and Exchange Commission to formulate a framework and amend/revoke the Mutual Fund Rules-2025 in this regard.
SM Iqbal Hossain, president of the Bangladesh Capital Market Investors Association, who participated in the seminar, said, "If the existing term funds are redeemed/converted, the fund assets will have to be sold and the investors' money will be returned, which may create pressure to sell shares worth several thousand crores of taka immediately in the market. This may lead to a downward trend in the market indices and spread panic among investors."
According to him, if a panic-induced over-selling trend occurs, the total selling pressure in the market could exceed Tk 20,000 crore, which could adversely affect market liquidity and stability.
He also said that there are questions in the market circles about some policy decisions taken in the capital market in the past few years. According to him, the Mutual Fund Rules-2025 and Margin Rules-2025 need to be reconsidered/cancelled. In the long-term interest of the capital market, the effectiveness and potential impact of these rules should be discussed with the participation of all the parties concerned.
















