Stocks slumped further on Monday, the second day after unveiling the budget, as some proposals of the budget made investors upsets.
DSEX, the prime index of the Dhaka Stock Exchange (DSE), settle at 5,375, shedding 55.54 points or 1.02 per cent over the previous session.
Finance Minister AHM Mustafa Kamal unveiled the national budget for the fiscal year (FY) 2019-20 on Thursday last.
The finance minister proposed, among other measures, imposition of 15 per cent additional tax on retained earnings or reserves, if the amount exceeds 50 per cent of the paid-up capital of the company.
The budget 2019-20 also proposed imposing 15 per cent tax on stock dividend to promote cash dividend as part of efforts to increase money flow into the stock market.
Market analysts said the good companies might face difficulties with the proposed of 15 per cent tax on stock dividend.
They said the proposal of imposing 15 per cent extra tax on retained earnings and reserves may be a cause of concern for good companies as they retain profits for future investments.
This is quite challenging as retained earnings is simply undistributed net profit after tax, which is already taxed, said an analyst.
Some 209 listed companies will have to pay an additional Tk 107.92 billion if the proposed 15 per cent tax on ‘reserves and retained earnings’ is implemented, he said quoting media reports.
The market opened on downward note and the negative trend continued until end of the session with no sign of reversal.
Two other indices also ended lower. The DS30 index, comprising blue chips, fell 15.70 points to finish at 1,889 and the DSE Shariah Index eroded 11.41 points to close at 1,223.
Turnover, another important indicator of the market, stood at Tk 5.35 billion, remaining almost unchanged over the previous day’s turnover of Tk 5.34 billion.
A total number of 150,130 trades were executed in the day’s trading session with trading volume of 161.17 million securities.
The market capitalisation of the DSE also fell to Tk 3,968 billion on Monday, from Tk 4,003 billion in the previous session.
The losers took a strong lead over the gainers as out of 353 issues traded, 235 declined, 77 advanced and 41 issues remained unchanged on the DSE trading floor.
Eastern Insurance was the day’s best performer, posting a gain of 9.91 cent while ONE Bank was the worst loser, losing 11.48 per cent following its price adjustment after record date.
The port city bourse, Chittagong Stock Exchange, also ended lower with its CSE All Share Price Index – CASPI –slumping by 135 points to settle at 16,488 and the Selective Categories Index - CSCX –losing 82 points to finish at 9,991.
Here too, the losers beat gainers, as 180 issues closed lower, 69 higher and 21 remained unchanged on the CSE trading floor.
The port city bourse traded 8.57 million shares and mutual fund units worth Tk 339 million in turnover.