After 38 months,the key index of the Dhaka Stock Exchange (DSE), DSEX, dipped below the 5,200-mark on Sunday —the first session after the proposed Tk 7,97,000 crore national budget for FY2024-25 was placed in parliament last Thursday.
Investors were disappointed because the proposed budget did not include any positive news for the stock market, market insiders said.
The market opened sharply lower, which continued until the end of the session with no sign of reversal amid persistently lacklustre trade.
DSEXlost 65.76 points or 1.26 per cent and closed at 5,171.56 at the end of trading. The blue-chip index,DS30, and the Shariah-based index,DSES, closed at 1,835.46 and 1,120.83 points, respectively.
Most of the large-cap sectors posted negative performance on the day. NBFI experienced the highest loss at 2.25 per cent. Block trades contributed 13.6 per cent of the overall market turnover.
VFSTDL was the day's top gainer, posting a 9.45 per cent gain while ESQUIRENIT was the worst loser, losing 3 per cent.Meanwhile, Taufika Foods and LOVELLO Ice-cream was the most traded shares, with a turnover of Tk 16 crore.
Meanwhile, market turnover decreased by 34 per cent to Tk 357 crore from the previous session’s Tk 540 crore.
Among the traded stocks, 33 advanced, 340 declined and 19 remained unchanged on the Dhaka bourse.
Finance Minister Abul Hassan Mahmood Ali on Thursday placed theproposed budget for FY25with apparently no good news for the capital market, at a time when the market is passing a critical time amid lingering macroeconomic challenges.
Sector people said that the market index dropped because investors did not find any positive steps in the budget for them.
The country’scapital bourse endured a major setback on Sunday due to predominant sell pressure in the majority of scrips in the post-budget session as investors' sentiment remained negative across the trading floor amidst the already subdued market confidence, said EBL Securities in its daily market review.
The market remained dominated by sellers throughout the session since investors preferred to remain watchful and monitor the market momentum following the budget declaration, it said.
The Chittagong Stock Exchange (CSE) also settled on red terrain on Sunday. The selected indices, CSCX, and All Share Price Index, CASPI, declined by 65.2 and 106.4 points, respectively.
Of the issues traded, 151 declined, 34 advanced and 32 issues remained unchanged on the CSE.
The port city bourse traded 7.785 million shares and mutual fund units with a turnover value worth about Tk 107.83 crore.
Nothing good for stock market
The proposed FY25budget did not give capital market investors anything to cheer. Even though stakeholders demanded some provisions to woo investors, as well as bringing good firms to the market, most of their calls remained unheard in the proposed budget.
Market insiders believe the budget did not reflect the requirements of the stock exchanges, brokers, merchant bankers, listed companies and investors.
Stock market investors will face a new tax burden in the upcoming fiscal year. The government has proposed imposing a 15 per cent capital gains tax on income exceeding Tk 50 lakh.
In his budget speech, the finance minister proposed “to tax any capital gain exceeding Tk 50 lakh received by a natural individual taxpayer from the transfer of shares or units of a listed company or fund.”
The ministerrecommended the move, which reverses a 2015 policy that exempted individual investors from capital gains taxes, to rationalise tax expenditure in FY25.
The budget has also proposed that profits made by any corporate entity other than individual investors by investing in the stock market will be taxed.
Meanwhile, the government proposed to set the corporate tax rate for listed companies at 22.5 per cent in the upcoming FY25 and FY2025-26, up from the existing 20 per cent, to reduce the tax barrier between listed and non-listed companies to 5 per cent from 7.5 per cent.
Speaking to The Business Post, stock market analyst and former Dhaka University economics professor Abu Ahmed said, “The budget is disappointing for the capital market. Nothing is there for the sector.All the privileges of the capital market are being removed by imposing new taxes.”
He continued, “The stakeholders give various proposals to the government before the budget, but in reality, there is no reflection in the budget. As a result, the efforts of BSEC, DSE or related stakeholders to improve the capital market are being killed through the budget.
“Even if the government has a positive attitude towards the capital market, the capital market has no value to those who prepare the budget. As a result, there is no opportunity for investors to make a profit by investing in the capital market.”
Abu Ahmed then pointed out, “The tax difference between listed and non-listed companies was 7.5 per cent. Now it has been brought down to 5 per cent. Then how will it be possible to bring good companies to the capital market?”
Criticising the gain tax, he said, “The gain tax and the tax on dividends are different issues. Gain tax is the profit made by buying shares at a low price and selling them at a high price. And the tax on dividends is mentioned in the income statement.”
Besides, Abu HenaMdRahmatulMuneem, the chairman of the National Board of Revenue, emphasised in a post-budget press conference that taxation was not the root cause of the capital market's issues and noted that longstanding tax incentives had not fostered market growth.
Capital market stakeholders have urged the government to reconsider this move, citing its potential to induce panic in an already fragile market.
