Stocks fall despite corporate tax cuts

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The national stock market plunged yesterday, the first trading session since Finance Minister AHM Mustafa Kamal proposed the national budget for the financial year 2022-23 in parliament on Thursday.

The DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), fell 48 points, or 0.72%, to close the day at 6,431.

Similarly, the turnover of the Dhaka Stock Exchange fell by 16% to Tk 636 crore from the Tk 758 crore recorded on Thursday.

“Investors are not happy with the fiscal measures given for the stock market and therefore they are reacting negatively,” said an investment banker.

A corporate tax cut of 2.5 percentage points was included in the proposed national plan, but it affected both listed and unlisted companies.

In addition, two conditions have been set that companies will have to divest more than 10% of shares and maintain all revenue transactions through banking channels in order to enjoy the benefit.

In addition, banks, NBFIs, insurance, tobacco and telecommunications companies have been excluded from the benefit, even though there are 113 such companies which represent a third of all listed companies.

Additionally, the government abolished the ability to launder black money through the stock market.

“So investors think the market didn’t get exclusive measures in the budget,” the investment banker said.

A stockbroker said investors hoped the government would raise the tax-free dividend income cap to Tk 50,000 for the next financial year.

In addition, the tax gap between listed and unlisted companies should be increased to encourage more companies to go public.

“However, no direct metrics for the stock market were given,” he added. The DS-30, the blue chip index, and the DSES, the Sharia-based index, fell 17 points and 10 points respectively.

“The DSE fell into negative territory as investors accepted the proposal to remove the ability to invest undisclosed earnings in stocks as a market-unfriendly move,” International Leasing Securities said in its Daily Review.

The change alone prevented investors from injecting new funds into the market. As such, the index started a steep slide from the start of the trading session.

However, the upward price movements of a few stocks later in the day helped reverse the downward trend to some extent, he added. Almost all major sectors posted losses, with paper and printing falling 2.6% while ceramics fell 0.7%.

Investors mainly focused on the textile (11.8%), pharmaceutical (10.7%), miscellaneous (10.5%) and engineering (9.6%) sectors.

On the DSE, 53 stocks rose, 306 fell and 19 were unchanged.

Meghna Insurance topped the list of winners, up 9.91%, while Dulamia Cotton Spinning Mills, Monno Fabrics, Shinepukur Ceramics and Shurwid Industries ranked among the top five.

Summit Alliance Port eroded the most, falling 2%. Renwick Jasneswar & Company, Green Delta Insurance, Nitol Insurance Company and Janata Insurance were among the other companies in the losers tally.

Shinepukur Ceramics became the most traded stock with its shares worth Tk 39 crore changing hands, followed by Beximco Ltd, BDCOM Online, IPDC Finance and Bangladesh Shipping Corporation.

The Chittagong Stock Exchange (CSE) also fell yesterday as CASPI, the port city’s main stock market index, edged down 134 points, or 0.70%, to 18,891.

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