DSEX, the key index of the Dhaka Stock Exchange (DSE), closed in red this week — the first one after the proposed Tk 7,97,000 crore national budget for FY2024–25 was placed in parliament on June 6.
The key index lost 119.51 points or 2.28 per cent and ended the week at 5,117.81 points as budgetary proposals to impose capital gain taxes and reduce tax rate differences between listed and non-listed companies negatively affected investor sentiment.
Investors’ participation in the market also declined as average turnover decreased by 16.6 per cent to Tk 376 crore, down from the previous week’s Tk 451 crore.
The market began the week on a negative note, with the reins of market momentum in the hands of sellers in the first three sessions of the week, shedding the benchmark index to the lowest level in 42 months.
The market performed five sessions this week. The market started on a negative note by 1.26 per cent on Sunday and remained negative throughout Monday by 1.27 per cent and Tuesday by 0.70 per cent.
However, the market turned positive on Wednesday by 0.26 per cent and ended the week on a positive note on Thursday by 0.68 per cent.
In its weekly market review, EBL Securities said that the capital bourse continued its bearish headwinds as budgetary proposals to impose capital gain taxes and reduce tax rate differences between listed and non-listed companies negatively affected investor sentiment, inducing them to reduce their capital market exposure further amidst an uncertain market outlook.
Bargain hunters took control in the last two sessions of the week as they opted to take positions in the low-priced scrips with positive expectations owing to the prevailing rumours on the probable withdrawal of the proposed capital gain taxes, it said.
The blue-chip index, DS30, lost 36.09 points and stood at 1,821.89 points. The Shariah-based index, DSES, lost 28.71 points and stood at 1,108.06 points.
All the financial sectors registered negative performance this week. Life Insurance experienced the highest loss of 6.20 per cent followed by Mutual Fund 4.39 per cent, NBFI 4.36 per cent, General Insurance 2.72 per cent, and Bank 1.73 per cent.
Finance Minister Abul Hassan Mahmood Ali on June 6 placed the proposed FY25 budget with 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.
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 minister recommended 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.
The government also 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.
Considering the depressed state of the capital market and the investment situation of investors in financial distress over the last few years, the DSE Brokers Association of Bangladesh (DBA) on Tuesday urged the government to withdraw the proposed tax on capital gains.
