Stocks drop for 2nd day on revised taxes

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Dhaka stocks dropped for the second day on Tuesday as investors kept selling shares as the budget for this fiscal year might fail to meet expectations of many investors.

DSEX, the key index of Dhaka Stock Exchange, shed 0.67 per cent, or 36.69 points, to close at 5,384.92 points on Tuesday after losing 8.42 points in the previous session.

The market started falling from the very beginning of the day and descended more firmly as the time progressed to end the session deep into the negative zone as investors went for share sales after the passage of the national budget for FY 2019-20, market operators said.

The national budget was passed in parliament on June 30 and the finance bill on June 29.

The government imposed 10 per cent tax on stock dividend if it exceeds cash dividend, revising its earlier budget proposals.

Market experts said the tax might force some companies to declare cash dividend more than the stock dividend, but the tax might be a burden for some sectors including bank.

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

Experts said the additional amount of cash dividend would mainly be paid by a number of firms from pharmaceutical sector, fuel and power sector and banking sector.

Stock market analyst and United International University professor Mohammad Musa told New Age that investors did not get what they expected from the government in the national budget.

He said that investors expected that the government would withdraw the tax on retained earnings and stock dividend unconditionally.

Market experts said that the Bangladesh Energy Regulatory Commission on Sunday increased gas prices by 32.8 per cent on an average for all consumers with an effect from July 1 that might disappoint some investors.

The average share prices of food, bank, telecommunication, and non-bank financial institution dropped by 1.5 per cent, 1.2 per cent, 1.1 per cent, and 0.9 per cent respectively.

The turnover at the bourse increased to Tk 482.71 crore on Tuesday from that of Tk 469.75 crore in the previous session.

Out of the 352 shares and mutual funds traded on Tuesday, 143 advanced, 174 declined and 36 remained unchanged.

DS30, the blue-chip index of DSE, dropped by 0.85 per cent, or 16.51 points, to close at 1,912.57 points.

DSE Shariah index DSES declined by 0.76 per cent, or 9.52 points, to close at 1,235.16 points.

Runner Automobiles led the turnover chart with its shares worth Tk 13.73 crore changing hands.

National Polymer, United Power Generation Company, Bashundhara Paper Mills, Esquire Knit, Genex Infosys, Square Pharmaceuticals, JMI Syringe, Sino Bangla and New Line Clothings were the other turnover leaders.

Runner Automobiles gained the most on the day with a 9.96-per cent increase in its unit prices while SEML FBLSL Growth Fund was the worst loser, shedding 7.40 per cent.
Source: http://www.newagebd.net

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