Dhaka stocks rebound on tax review hope

Image: Bizbangladesh.net
Dhaka stocks gained in the past week as many of the investors hoped that the government would reconsider the proposed additional tax on listed companies during the passage of the finance bill.

DSEX, the key index of Dhaka Stock Exchange, gained 0.64 per cent, or 34.42 points, over the week to close at 5,430.05 points on Thursday, the last trading session of the week after losing 78.68 points in the previous week.

In line with the trend of the week before, DSEX dropped in the first two sessions of the past week amid investors’ worries over the proposed budgetary tax measures on the listed companies.

But the key index gained in the last three sessions as the government high officials said that the tax measures would be reconsidered during the passage of the finance bill in the parliament.

Finance minister AHM Mustafa Kamal in the proposed budget that was placed before parliament on June 13 imposed 15 per cent additional tax stock dividend, retained earnings and reserve of the listed companies.

The prime minister’s private industry and investment affairs adviser Salman F Rahman, however, on June 24 said that the government was seriously working on the issue of proposed 15 per cent additional tax on retained earnings and reserve of listed companies.

National Board of Revenue chairman Mosharraf Hossain Bhuiyan earlier on June 17 said that the proposed tax measures on the listed companies would be reviewed.

The finance bill for the fiscal year of 2019-20 was passed in parliament on Saturday with some changes to the proposed taxation on the listed companies.

According to the financial bill, if any listed company declares stock dividend, it must declare same amount of cash dividend. If the amount of stock dividend surpasses the cash dividend, the company must pay 10 per cent tax on the total amount of stock dividend.

Besides, a listed company can transfer 70 per cent of its net profit of a financial year to its reserve and retained earnings, and the rest 30 per cent would be distributed to the shareholders as dividend. But, if it fails to do so, it must pay 10 per cent tax every year on total amount transferred to reserve and retained earnings.

EBL Securities in its weekly market commentary said, ‘During this week [past week], investors were active in the trading floor regarding the news of reviewing proposed tax on retained earnings and reserve which may approved in the final budget made investors hopeful.’

Average share prices of energy, bank, telecommunication and pharmaceutical sectors advanced 1.9 per cent, 1.6 per cent, 1.5 per cent and 0.7 per cent respectively.

The daily average turnover on DSE dropped to Tk 423.74 crore in the past week from Tk 519.62 crore in the previous week.

Average share prices of life insurance, general insurance, non-bank financial institutions and textile sectors declined by 5.4 per cent, 3.7 per cent, 1.9 per cent and 0.5 per cent respectively.

Out of the 354 traded issues, 172 declined, 159 advanced and 23 remained unchanged.

DS30, the blue-chip index of DSE, advanced 1.61 per cent, or 30.62 points, to close at 1,924.91 points.

Shariah index DSES added 1.02 per cent, or 12.55 points, to finish at 1,245.83 points.

United Power Generation Company led the turnover chart with its shares worth Tk 104.80 crore changing hands in the week.

JMI Syringe, Square Pharmaceuticals, Bangladesh Shipping Corporation, Fortune Shoes, Genex Infosys, National Polymer Industries, Monno Ceramics, BRAC Bank and Global Insurance Company were the other turnover leaders.

Prime Finance First Mutual Fund gained the most in the week with a 23.23-per cent increase in its share prices while IPDC Finance was the worst loser, shedding 18.44 per cent.
Source: http://www.newagebd.net

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