Stocks drop for 3rd day on tax measures
Image: Bizbangladesh.net
Dhaka stocks dropped for the third day on Wednesday as investors were grappling with tax imposition on the listed companies, gas price hike and continuous share sales by the foreign investors.
DSEX, the key index of Dhaka Stock Exchange, shed 0.23 per cent, or 12.71 points, to close at 5,372.21 points on Wednesday.
The DSEX lost 57.82 points in last three sessions.
After a slight gain at the beginning, the market started falling and finished the session in the negative zone as investors continued selling shares following the passage of national budget and gas price hike.
The national budget for the fiscal year of 2019-20 was passed in parliament on June 30 and the finance bill on June 29.
In the budget, the government imposed 10 per cent tax on stock dividend if it exceeds cash dividend, revising its earlier budget proposal regarding the tax.
It also levied 10 per cent tax on the amount of profits transferred to reserve by a listed company if the amount exceeds 70 per cent of the company’s net profits for the year.
Market experts said that the taxation went against the business norms.
They said investors did not get what they expected from the government in the national budget.
Investors expected that the government would withdraw the tax on retained earnings and stock dividend unconditionally, they said.
EBL Securities in its daily market commentary said, ‘As the decisions of tax on stock dividend and retained earnings were passed, investors became worried about shares of banks and financial institutions, which was evident in high selling pressure in the two particular sectors.’
‘Also, the news of increasing gas prices had an adverse impact on the returns of cement, ceramics, power and textile sectors,’ it said.
Market experts said that the Bangladesh Energy Regulatory Commission on Sunday increased gas prices by 32.8 per cent on average for all consumers with an effect from July 1 that might disappoint some investors.
Besides, investors’ mood was dampened following the media reports that the net foreign investment at DSE turned negative in the fiscal year ending June, 2019 for the first time after the financial year of 2010-11.
The net foreign investment at the country’s premier bourse stood at Tk 183.70 crore negative in FY19, which was the lowest after FY11 when it was Tk 404.59 crore negative.
The average share prices of non-bank financial institution, textile, bank and telecommunication dropped by 3.8 per cent, 0.9 per cent, 0.7 per cent and 0.3 per cent respectively.
The turnover at the bourse increased to Tk 507.47 crore on Wednesday from that of Tk 482.71 crore in the previous session.
Out of the 352 shares and mutual funds traded on Wednesday, 177 declined, 126 advanced and 50 remained unchanged.
DS30, the blue-chip index of DSE, dropped by 0.15 per cent, or 2.91 points, to close at 1,909.66 points.
DSE Shariah index DSES shed 0.09 per cent, or 1.18 points, to close at 1,233.97 points.
National Life Insurance led the turnover chart with its shares worth Tk 15.13 crore changing hands.
Runner Automobiles, United Power Generation Company, Singer Bangladesh, Monno Ceramics, National Polymer, National Tubes, Bangladesh Submarine Cable Company, Square Pharmaceuticals and Esquire Knit were the other turnover zleaders.
Dhaka Insurance gained the most on the day with a 9.79-per cent increase in its unit prices while SEML Lecture Equity Management Fund was the worst loser, shedding 7.40 per cent.
Source: http://www.newagebd.net
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