Dhaka bourse suffers sharpest fall in six months

The key index of the Dhaka Stock Exchange (DSE) yesterday lost 0.63 per cent, the sharpest single-day decline in at least the past six months, as tensions grew over the proposed increase in capital gains tax for general investors.

The DSEX, the benchmark index of the premier bourse in Bangladesh, shed 40 points to 6,316 by the end of the session.

The DS30, representing blue-chip stocks, decreased 0.43 per cent to 2,188 points while the DSES, an index comprised of shariah-compliant companies, edged down 0.72 per cent to 1,372 points.

As the draft Income Tax Act 2023 proposed raising the capital gains tax for general investors, people are afraid of a potential decrease in net earnings, especially amid the market's bearish trend, said a top official of a stock brokerage.

"So, they panicked and sold shares."

Capital gains are the profit one earns on the sale of assets such as stocks, bonds or real estates.

The draft tax law includes that capital gains tax for institutional investors will be 15 per cent instead of the existing 10 per cent. General investors will face the same rate if they transfer or sell shares before holding them for less than five years.

If the share is transferred before five years pass, it would be considered as the seller's income and therefore will be subject to income tax varying from 0 per cent to 25 per cent.

The Income Tax Ordinance 1984 will be replaced by the Income Tax Act 2023, which will likely be tabled at parliament soon. If approved, the new act will come into force in July.

Turnover, a key indicator of the market's liquidity, fell 13.5 per cent to Tk 1,086 crore on the DSE yesterday.

Stocks listed with the country's premier bourse nosedived due to heavy selling pressure among panicked investors as word spread about the imposition of higher capital gains tax, International Leasing Securities Ltd said in its daily market review.

Moreover, political and economic uncertainties looming ahead of the national election intensified the decline of market indices, it added.

Tax analysts say the draft Income Tax Act 2023 would supersede all other acts if contradicted on any issues.

Among the sectors, textile rose 0.4 per cent and engineering advanced 0.3 per cent whereas travel dropped 3.6 per cent, jute fell 3.5 per cent and general insurance lost 2.7 per cent.

Investors' attention was mostly centred on the life insurance (16.3 per cent), IT (13.4 per cent) and fuel and power (12.7 per cent) sectors.

Of the securities traded, 25 advanced, 157 declined and 182 did not show any price movement.

Trust Islami Life Insurance made the highest gains with an increase of 9.9 per cent.

National Tea Company, Meghna Life Insurance Co, Rupali Life Insurance Company and Alif Industries were among the top gainers as well.

Mir Akhter Hossain Ltd was the biggest loser, shedding 10 per cent.

Simtex Industries, Meghna Pet Industries, Agni Systems, and Agrani Insurance were also on the list of significant losers.

Associated Oxygen was the most traded stock with issues worth Tk 52 crore having been transacted.

Intraco Refueling Station, Meghna Life Insurance, Rangpur Dairy & Food Products, and Bangladesh Shipping Corporation also saw significant turnover.

The Caspi, the all-share price index of the Chittagong Stock Exchange, plummeted 109 points, or 0.58 per cent, to close at 18,667 points.

Of the issues traded, 31 rose, 108 retreated and 92 did not see any price swing.

However, turnover of the port city bourse edged down 19 per cent to Tk 18.49 crore from the previous day.