Stocks in red again as revised tax, gas price hike disappoint investors

Image: Bizbangladesh.net
Dhaka stocks returned to negative zone in the past week as investors were disheartened by the revised tax measures on the listed companies in the finance bill and the government decision to hike gas prices.

DSEX, the key index of Dhaka Stock Exchange, fell by 0.91 per cent, or 49.27 points, over the shortened week to close at 5,380.79 points on Thursday, the last trading session of the past week.

DSEX had gained 34.42 points in the previous week as investors had hoped that the government would reconsider the proposed additional tax on listed companies during the passage of the finance bill.

But, the parliament on June 29 (Saturday) passed the Finance Bill 2019 with minor changes and the proposed taxes on the listed companies were changed in a way which would give a little benefit to the stock investors, said market operators.

In the final finance bill, the government imposed 10 per cent tax on stock dividend if it exceeds cash dividend, revising its earlier budget proposal to impose tax on any stock dividend.

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.

As investors were still assessing the revised tax measures, they went into cautious trading on the first trading session of the past week on Sunday, with DSEX falling 8.42 points.

The market was closed on Monday because of bank holiday on July 1.

Investors resumed selling on Tuesday as they assessed that the revised tax measures would bring little benefits to them, said a stockbroker.

Besides, the government announcement of gas price hike with effect from July 1 also created worries among investors as the gas price hike would hit manufacturing sector hard.

Investors continued selling shares on Wednesday with DSEX shedding 12.71 points because of their disappointment over tax measures and gas price hike along with 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 slide of DSEX, however, was halted on Thursday with 8.58-point rise as some of the investors went into bargain hunting share purchases as they realised that the tax measures were there to stay in the financial year as the parliament had approved it. 

EBL Securities in its weekly market update said, ‘The capital bourse of the country observed correction vibe throughout the week but managed to close slightly higher in the final session.

‘Market participants from both side of the fence remained active throughout the week and made cautious movement regarding their investment majority from textile sector and ahead of year-end declaration investors opted for position taking on sector specific stocks to re-invest their portfolio to take fresh position,’ it said.

‘Moreover, most of the investors followed cautious stance after budget approval though the latest gas price hike made them more cautious,’ it said.

Out of the 355 issues traded in the week, prices of 166 declined, 165 advanced and 23 remained unchanged.

The daily average turnover on DSE dropped to Tk 4,86.86 crore in the past week from Tk 423.74 crore in the previous week.

Average share prices of bank sector fell by 1.7 per cent, non-bank financial institute 2.1 per cent, jute 4.6 per cent, cement 1.5 per cent, ceramics 2.3 per cent, fuel and power 1.2 per cent and telecommunication fell by 1.8 per cent.

Average share or unit prices of mutual funds soared by 9.3 per cent, life insurance 8.2 per cent, general insurance 1 per cent, IT 2.4 per cent and paper and printing rose by 4.8 per cent in the week.

DS30, the blue-chip index of DSE, fell by 0.77 per cent, 14.83 points, to close at 1,910.08 points.

Shariah index DSES shed 1 per cent, or 12.43 points, to finish at 1,233.39 points.

Runner Automobiles Ltd led the turnover chart with its shares worth Tk 54.85 crore changing hands in the week.

United Power Generation Company, National Polymer Industries, Bangladesh Submarine Cable Company, National Life Insurance, Singer Bangladesh, Square Pharmaceuticals, JMI Syringe, Genex Infosys and Bashundhara Paper Mills were the other turnover leaders.

Prime Finance First Mutual Fund gained the most in the week with a 42.62-per cent increase in its unit prices while Peoples Leasing and Financial Services was the worst loser, shedding 13.04 per cent.
Source: http://www.newagebd.net

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