DSE Weekly Review

Stocks snap 3-week gains after budget

Staff Correspondent | Published: 22:29, Jun 22,2019


Dhaka stocks plunged in the past week, after a three-week gaining spell, as investors went for selling shares following the government’s budget proposal to slap tax on listed companies’ reserve and retain earnings.

DSEX, the key index of Dhaka Stock Exchange, lost 1.44 per cent, or 78.68 points, over the week to close at 5,395.63 points on Thursday, the last trading session of the week after gaining 243.5 points in previous three weeks.

The market plunged in the first two sessions of the week as investors went for panic-driven sales after the government proposed new tax on the listed companies.

Finance minister AHM Mustafa Kamal on June 13, in his proposed budget for financial year 2019-20 included a proposal to impose 15 per cent tax on retained earnings and reserve of a listed company if the figures exceed 50 per cent of the paid-up capital of the company.

He also proposed imposition of tax on the value of stock dividend at the rate of 15 per cent.

Investors’ selling was intensified in the third session on Monday following the media reports that the National Board of Revenue would bag Tk 11,000 crore in additional taxes from the reserves of the listed companies if the budget proposal was approved.

The panic-driven share sales had been eased after the National Board of Revenue chairman Mosharraf Hossain Bhuiyan on June 17 said that the 15 per cent tax on listed companies’ reserve and retained earnings would be reconsidered, that would lessen worries among investors.

The investors were waiting how the government would review the proposed tax on the listed companies.

Before the loss in the past week, the market had gained for the three consecutive weeks as investors were expecting some incentives for the capital market in the budget since the finance minister had pledged so.

EBL Securities in its weekly market commentary said Budget declaration of imposing 15 per cent tax on stock divided and on retained earnings and reserve if it exceeds 50 per cent of paid up capital had caused concerns among investors which was evident in the 96.52 points decrease in the DSEX index in the first 2 days.’

‘However, after the announcement of NBR chairman to review the proposed tax on retained earnings and reserve has brought back confidence among investors which resulted in DSE index increase in two straight sessions,’ it said.

Average share prices of non-bank financial institution, bank, telecommunication and textile sectors dropped by 3.0 per cent, 2.7 per cent, 0.6 per cent and 0.5 per cent respectively.

On the other hand, share prices of general insurance, life insurance and energy sector advanced by 1.4 per cent, 0.9 per cent and 0.1 per cent respectively.

The daily average turnover on DSE rose to Tk 519.62 crore in the past week from Tk 492.67 crore in the previous week.

Out of the 354 traded issues, 226 declined, 102 advanced and 26 remained unchanged.

DS30, the blue-chip index of DSE, dropped by 0.56 per cent, or 10.70 points, to close at 1,894.39 points.

Shariah index DSES shed 0.87 per cent, or 10.78 points, to finish at 1,233.28 points.

United Power Generation Company led the turnover chart with its shares worth Tk 95.31 crore changing hands in the week.

JMI Syringe, Eastern Insurance, DRAGON Sweater, New Line Clothings, Nurani Dyeing, Monno Ceramic Industries, Global Insurance, Rupali Life Insurance, and BBS Cables were the other turnover leaders.

Sunlife Insurance Company gained the most in the week with a 19.26-per cent increase in its share prices while SEML FBLSL Growth Fund was the worst loser, shedding 15.25 per cent.

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