Dhaka stocks plummet as PLFSL liquidation move takes toll

Staff Correspondent | Published: 00:54, Jul 14,2019

 
 

Dhaka stocks plummeted in the past week, stretching the losses to second week, as the investors who had been struggling with worries over budgetary measures and gas price hike, got panicked over the central bank move to liquidate crisis-hit Peoples Leasing and Financial Services.

DSEX, the key index of Dhaka Stock Exchange, plunged by 2.95 per cent, or 158.49 points, over the week to close at 5,222.30 points on Thursday, the last trading session of the past week after losing 49.26 points in the previous week.

The market witnessed fall in all the sessions of the week.

In line with the previous week, the DSEX fell in the first two sessions because of investors’ continuous worries over the budgetary tax measures on listed companies, government decision to hike gas price and Grameenphone’s tussle with the Bangladesh Telecommunication Regulatory Commission over unpaid audit claim.

The share sales increased in the last three sessions amid concern over the financial market following the government’s move to liquidate People’s Leasing and Financial Services Limited, a listed non-bank financial institution, they said.

The media reported on July 9 that the government had approved a Bangladesh Bank proposal to liquidate PLFS considering the fragile state of the non-bank financial institution.

The liquidation move heightened investors’ concern about the country’s financial sector that was plagued by various scams, huge defaulted loans and poor corporate governance.

Investors feared that more financial companies might face trouble considering their bleak situation making them risky for the depositors and investors.

There was no buyer for the shares of PLFS in the three sessions following the liquidation news. PLFS was the worst loser over the week, shedding 25 per cent to end the week at Tk 3.0 per share.

Investors were still assessing the tax measures on listed companies as many of the companies whose financial year ended in June would soon declare dividends.

The government imposed 10 per cent tax on stock dividend of a company if it would exceed cash dividend. It also levied 10 per cent tax on the amount of profits transferred to reserve by a listed company, if the amount exceeded 70 per cent of the company’s net profits for the year.

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.

The BTRC on July 4 reduced the bandwidth for Grameenphone by 30 per cent over unpaid audit claim, which triggered share sales of the company and it lost 7.12 per cent in the past week.

EBL Securities in its weekly market commentary said, ‘The market fall occurred as investors who have already been grappling with penalty tax on listed companies, gas price hike and Grameenphone woes get panicked by the liquidation news of Peoples Leasing and Financial Services.’

Average share prices of telecommunication, textile, non-bank financial institution and bank sectors slumped by 7.8 per cent, 6.5 per cent, 4.4 per cent and 1.8 per cent respectively.

Out of the 354 issues traded in the week, prices of 281 declined, 60 advanced and 13 remained unchanged.

The daily average turnover on DSE dropped further to Tk 422.57 crore in the past week from Tk 486.86 crore in the previous week.

DS30, the blue-chip index of DSE, plunged by 2.74 per cent, 52.36 points, to close at 1,857.71 points.

Shariah index DSES shed 3.15 per cent, or 38.79 points, to finish at 1,194.60 points.

National Life Insurance Company led the turnover chart with its shares worth Tk 78.58 crore changing hands in the week.

Runner Automobiles, Asian Tiger Sandhani Life Growth Fund, JMI Syringe, Rupali Insurance Company, Sinobangla Industries, United Power Generation Company, Monno Ceramic Industries, Grameenphone and Rupali Life Insurance were the other turnover leaders.

SEML FBLSL Growth Fund gained the most in the week with a 60-per cent increase in its unit prices while Peoples Leasing and Financial Services was the worst loser, shedding 25 per cent.

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