Stakeholders’ firm stance against proposed tax boosts investors’ confidence
The capital market of the country rose slightly on Tuesday after two days of sharp fall following the proposed budget on the back of a strong vocal stand by stakeholders against the government’s proposed asset tax on listed companies.
“Sentiment on the floors started improving shortly after a brief fall in the morning as attitude of stakeholders, including securities regulators, against the proposed disputed tax helped assure investors,” said Abdul Kader Nabil, a trader at brokerage firm LankaBangla Securities Limited.
The proposed budget for 2019-20 fiscal year imposes 15 percent tax on stock dividends by listed companies and a more disputed 15 percent tax on listed companies’ reserves exceeding 50 percent of their paid-up capital.
Independent studies show the government is going to take away more than Tk100 billion from reserves of 209 locally listed companies from next fiscal year if the proposed tax is implemented.
On Monday, stakeholders in a meeting with Bangladesh Securities and Exchange Commission (SEC) officials expressed their concerns over the proposed taxes; the SEC chief assured them of further discussing the issue with the government authorities.
Besides, bargain hunters also played a positive role to push stock prices up, according to UCB Capital Limited in their after-hour commentary.
Meanwhile, the DSEX, the main index of Dhaka Stock Exchange (DSE), rebounded on Tuesday to 5400.24 points, a 0.46 percent gain over its session closure on Monday.
Service and real estate, textiles, telecom, food and allied, ceramic and engineering sectors performed positively, while financial stocks, except for cash-rich insurance industry, keep losing price.
Textiles alone contributed 24 percent to the DSE turnover, with a 2.19 percent capital gain. With 1.04 percent price increase, General Insurance stocks also contributed to the market trade rise.