Stocks keep slumping on PLFS liquidation move
Image: Bizbangladesh.net
Dhaka stocks dropped for the third session on Tuesday amid panic selling as investors were unnerved by liquidation news of Peoples Leasing and Financial Services, a non-bank financial institution.
DSEX, the key index of Dhaka Stock Exchange, dropped by 0.72 per cent, or 38.57 points, to close at 5,280.04 points on Tuesday.
The DSEX lost 101 points in last three sessions.
After a slight gain at the beginning on Tuesday, the market started falling sharply as investors who have already been grappling with penalty tax on listed companies, gas price hike and Grameenphone woes got panicked by the liquidation news of Peoples Leasing and Financial Services.
The media reported that the government approved a Bangladesh Bank proposal for liquidating PLFSL considering fragile state of the NBFI.
PLFSL has failed to repay its depositors’ money and more than 60 per cent of loans and leases of the company have already turned into non-performing loans, the media reported.
Market operators said that most of the NBFIs in the country were in vulnerable position and the situation was further exposed by the move.
The situation became so worse that the government has no choice but to end business operation of the company and distribute its assets to claimants for the first time in the country, they said.
Market operators said bank and NBFI sectors went through a volatile situation due to loan scams, huge defaulted loans, political influence and poor corporate governance.
Investors feared that the government might move to liquidate more financial companies to pay their liabilities, they said.
The shares of Peoples Leasing and Financial Services have been trading under the ‘Z’ category, which groups low-profile and junk stocks, as the company failed to provide dividend after 2014.
On Tuesday, the shares of the company were traded at the lowest possible price on the circuit breaker from the very beginning of the day to end the session at Tk 3.60 each.
The market fell in six days out of seven sessions after the passage of the budget for this fiscal year as investors became upset by the penalty tax on the listed companies and the government’s move to hike gas price.
Market operators said that investors were disappointed as they found little incentives in the finance bill which imposed 10 per cent tax on listed cos’ stock dividend if it exceeds cash 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.
The Bangladesh Telecommunication Regulatory Commission on July 4 reduced the bandwidth for Grameenphone by 30 per cent, which triggered share sales of the company and it lost 5.30 per cent in last three sessions.
EBL Securities in its daily market commentary said, ‘The market started with optimism but did not sustain against its bearish trend that continued to prompt investors to liquidate their holdings as many investors followed cautious stance ahead of earnings and dividend declarations.’
Share prices of textile, telecommunication, pharmaceutical and bank sectors dropped by 1.4 per cent, 1.2 per cent, 0.6 per cent and 0.3 per cent respectively.
Mutual funds soared by 5 per cent as investors shifted their focus to less risky products, market operators said.
Out of the 353 scrips traded on the day, 242 declined, 86 increased and 24 remained unchanged.
Turnover on the bourse rose to Tk 512.91 crore on the day from Tk 424.66 crore in the previous session.
DS30, the blue-chip index of DSE, shed 0.56 per cent, or 10.64 points, to close at 1,875.52 points.
DSE Shariah index DSES declined by 0.71 per cent, or 8.74 points, to close at 1,207.49 points.
Runner Automobiles led the turnover chart with its shares worth Tk 18.97 crore changing hands.
Asian Tiger Sandhani Life Growth Fund, National Life Insurance, JMI Syringe, United Power Generation Company, Sinobangla Industries, Rupali Insurance Company, Grameenphone, Global Insurance and Rupali Life Insurance were the other turnover leaders.
EXIM Bank 1st Mutual Fund gained the most on the day with a 10-per cent increase in its share prices as the company offered two rights shares against each existing share while Peoples Leasing and Financial Services was the worst loser, shedding 10 per cent.
Source: http://www.newagebd.net
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