It’s time to launch financial advisory services

05 November 2022, 22:10

Last modification: November 05, 2022, 10:17 p.m.

Md Nafeez Al Tarik. Illustration: TBS


Md Nafeez Al Tarik. Illustration: TBS

Amidst frequent and unique world events, making better use of money through investments has become more difficult for savers as the capital market in Bangladesh needs the immediate launch of professional financial advisory services, said Md Nafeez Al Tarik, Director General of Dhaka. Bank Securities Ltd – one of the best brokerage companies in the country.

Nafeez Al Tarik, Chartered Financial Analyst and Financial Risk Manager, said that many savers, although they do not need the short-term exit, deposit their funds in banks for a low return just because they don’t know how to invest in other financial assets. assets like stocks, bonds, mutual funds.

The investment expert noted that the securities regulator should immediately respond to the situation by framing the regulation of professional financial advice services and letting experts eligible under their regulatory license help people in the right places. investments for their financial well-being.

About ten years ago, the Bangladesh Securities and Exchange Commission (BSEC) launched two regulations – “Bangladesh Securities and Exchange Commission (Research Analysis) Rules” and “Investment Advisor Bidhimala”. The former was finalized on the basis of professional analysts who provide their clients with analytical reports, but the draft rule on investment advisory service was not adopted by the regulator during this period.

Tarik, in an interview with The Business Standard, recently said that Bangladesh’s capital market currently has marketable bonds – treasuries, corporate bonds and Sukuk – alongside efforts to launch more mutual funds, in launching new products like exchange-traded funds and real estate investments. trusts.

All have their practical issues in terms of floating, operating, attractive returns for investors and, very importantly, scalability for the public.

For example, he suggested tax advantages on the interest income of bond investors so that their effective return reaches a lucrative level.

He said that financial advisors can influence many savers to invest some of their money in market instruments because they have the knowledge and experience to find good investment opportunities, deciding on the right product for an investor according to his financial profile and his appetite.

Always in a particular situation, the best answer to too many important questions – such as how much capital to invest in which instrument, when to buy or when to sell or what to do in the event of an unforeseen event – comes from the experts, said Tarik who is also a reputable mentor in the Bangladesh capital market industry.

Bangladesh, like its peer economies, is suffering from a deterioration in the balance of payments and the exchange rate as a result of the Russian-Ukrainian conflict and the capital market is struggling with the fallout from the war.

In tough times for equities, Tarik said, financially savvy investors tend to reduce their exposure to equities and increase relatively safer ones like bonds. But since the majority of listed scrips are not traded due to the unconventional floor price in local exchanges, exit becomes impossible when an investor needs it.

Tarik, who prefers value investments to market speculation, said the success of investments is subject to deeper analysis of the situation and factors.

For example, earnings per share that are widely followed by investors can look misleading if a company is too dependent on accrued revenue share and generates less cash flow in the business. Free cash flow per share and return on investment are two important metrics in relation to earnings per share and earnings growth gauges.

A company can actually hurt shareholder value in some circumstances by increasing its profits. This occurs when the capital investments needed for growth exceed the present value of the cash flows from those investments. Before even looking at financial metrics, an investor should consider the quality of the board and senior management and their professionalism in order to generate shareholder value.

As psychology dominates numbers in the stock market, short-term speculation may not need such rigorous analysis since in the short term, the stock market behaves like a voting machine. But in the long run, it acts like a balance, as the father of value investing, Benjamin Graham, said.

If an investor wants to invest for retirement or a child’s education, such analysis of the board, management, governance and a thorough financial analysis of the company is crucial, he said. declared.

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