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DSE indices weekly gains

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DSEX, the broad index of the Dhaka Stock Exchange (DSE), progressed 57 points or 0.9pc in the exchanging week from 2 October to 6 October, although stocks were traded in four days as the market was closed one day due to a government holiday.

On a daily basis, the average turnover decreased by 9.7pc to Tk1,319.54 crore last week from Tk1,461.23 crore in the previous week.

Hence, the total market capitalization increased by 0.34pc to Tk5,21,676 crore.

In the week before last, the equity indices on the DSE encountered corrections as investors decided to realize profits from the recently rallied stocks and stay on the sidelines ahead of upcoming earnings declarations.

“The indices of the DSE marked steady gains throughout the week as investors looked out for particular sector-specific stocks with the expectation of quick gains, while a majority of stocks were stuck at the floor prices without potential buyers, gradually reducing the turnover in the market,” says EBL Securities in a weekly comment.

“Moreover, recent disclosures regarding declining export and remittance inflows along with a widening trade deficit have soared the investors’ concerns regarding the market outlook, prompting them to stay watchful on the trading floor,” reads the report.

Investors were active primarily in the pharmaceutical & chemicals sector, which contributed 18pc to the total turnover, followed by the engineering sector contributing 16.7pc, and the miscellaneous sector adding 15.2pc.

The jute sector led the highest sectoral gain with 5.5pc, while the travel sector showed the highest correction of 3.4pc.

At the end of the week, the average price-to-earnings (PE) ratio on the DSE stood at 14.98, which was 0.5pc higher than 14.91 a week ago.

 

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Market Woes Drive Investors Away as Dhaka Bourse Sees Significant Decline

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By June 20 this year, approximately 102,000 beneficiary owners’ (BO) accounts were emptied, and market capitalization plummeted by Tk 1.37 lakh crore due to prolonged poor returns, frustrating investors and prompting them to exit the market.

Data from the Central Depository Bangladesh Limited (CDBL) reveals that in the six months leading up to June 20, the total number of BO accounts with zero share balance surged by 34% to 398,000, while BO accounts with share balances fell by 91,651 to 1.312 million.

During this period, the benchmark index DSEX of the Dhaka Stock Exchange (DSE) dropped over 1,000 points, closing at 5,244, while the blue-chip index DS30 fell by 218 points, settling at 1,875. The market capitalization at DSE also declined by over 17%, ending at Tk 6.43 lakh crore on June 20.

Rising interest rates, taxes on individual investors’ capital gains from listed securities, and a severe confidence crisis due to regulatory interventions are collectively impacting stock market performance, according to stockbrokers and market experts.

The capital market has been grappling with economic uncertainty, exacerbated by the Russia-Ukraine war. In response to the crisis, the Bangladesh Securities and Exchange Commission (BSEC) imposed a floor price in 2022 to prevent a freefall in share prices. Despite lifting the restriction after more than two years, the bearish trend persisted. Consequently, BSEC reintroduced protective measures, including reducing the circuit breaker limit from 10% to 3%.

Abu Ahmed, former economics professor at the University of Dhaka, explained that unprecedentedly high interest rates, especially on treasury bonds, have driven large investors to shift their funds from the stock market to bonds. “With treasury bond rates steady at around 12%, it’s a risk-free, preferred choice for many investors,” he said. This shift has resulted in a fund crisis in the market, he added.

Ahmed also highlighted a decline in the number of reputable companies entering the market and underperformance in key sectors like banks, insurance, non-bank financial institutions, and manufacturing companies. He pointed out that a lack of good governance and long-term policy support has eroded investor confidence. Additionally, the government is withdrawing previously granted investment benefits.

Md Saiful Islam, president of the DSE Brokers Association of Bangladesh (DBA), stated in a June 11 press conference that factors such as the absence of high-quality initial public offerings (IPOs), governance issues among stakeholders, and the proposed capital gains tax are diminishing investor confidence. He urged the government to withdraw the capital gains tax, asserting that it exacerbates an already bleak market.

Finance Minister AH Mahmood Ali proposed a 15% tax on individual investors’ capital gains exceeding Tk 50 lakh from listed securities in the upcoming fiscal year budget, amid a market downturn. However, Abu Hena Md Rahmatul Muneem, chairman of the National Board of Revenue, argued in a post-budget press conference that taxation was not the root cause of the market’s issues, citing that long-standing tax incentives had not spurred market growth.

Despite these challenges, the benchmark index of the DSE has risen over the last four trading sessions, recovering 174 points to close at 5,244 last Thursday. Stockbrokers attribute this uptick to investor optimism about a potential rationalization of the capital gains tax proposal and a concessional salvage fund for the state-owned Investment Corporation of Bangladesh (ICB).

EBL Securities noted in their daily market commentary that rumors about the possible withdrawal of the proposed capital gains tax have instilled some confidence among cautious investors.

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Dhaka Bourse Skyrockets, Achieving 4-Day Gaining Streak

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Dhaka Stock Exchange DSE, Bourse on the last working day of the week, 20th June, ended with a hike in Indices and Turnover from the previous working session. This information is known from DSE sources.

452 crore 94 lakh taka shares were traded on this day. 206 crore 50 lakh more tradings were done in DSE today compared to the previous workday, June 19th, Shares worth Tk 246 crores 44 lakh shares were traded last time, Wednesday

The benchmark DSEX increased 82.74 points or 5,244 The Shariah-based index DSES added 24.78 points or 1,146, and the blue-chip index DS30 gained by 31.34 points or 1,875.

Of the issues traded, 288 advanced, 55 declined and 50 remained unchanged.

Linde Bangladesh Limited ranked top gainer on DSE, the share price increased by Tk 424.10 paisa or 43.04 percent. On this day, the share was last traded at Tk 1409.40 paisa.

Global Heavy Chemicals Limited ranked top loser on the DSE, the share price dropped by Tk 1.20 paisa or 3.00 percent. On this day, the share was last traded at Tk 38.90 paisa.

DSE topped on trade is Asiatic Laboratories Limited 14 crore 63 lakh takas of company shares have been traded.

A total of 45 companies’ shares were traded in the Block on Dhaka Stock Exchange. A total of 1 crore 71 lakh 39 thousand 978 shares of the companies were traded. The financial value of which is 113 crore 38 lakh taka.

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National Tea Sets New Subscription Date for Tk279.7cr Placement Shares

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National Tea Company Limited, a publicly traded entity, has announced new subscription dates for its Tk279.7 crore placement shares. Originally slated for nearly a year ago, the subscription had been postponed by regulatory authorities but is now set to proceed following a recent court directive.

According to the company’s disclosure, the subscription period will run from June 19 to August 19 during banking hours. This follows a letter from the Bangladesh Securities and Exchange Commission (BSEC) instructing the resumption of the capital-raising initiative, in compliance with a High Court order.

The primary objective of issuing these placement shares is to fuel business growth, finance working capital, and repay bank loans. However, due to a funding shortfall, the company has been unable to complete its modernization projects and other initiatives, resulting in decreased turnover caused by declining average sale prices in the auction market for its products.

Following the court’s directive, significant progress has been made in implementing the state-owned company’s plans.

In July of the previous year, Jakir Hossain Sarkar, a minor shareholder with just 10 National Tea shares, filed a writ petition with the High Court opposing the company’s scheme to issue fresh shares as approved by the BSEC, alleging unequal treatment of existing shareholders. The court later upheld the BSEC’s approval. Upon a petition by the market regulator, the Appellate Division’s chamber judge temporarily stayed the High Court’s order.

Shareholders have borne the brunt of these legal battles. After the record date, the price of National Tea shares dropped in anticipation of the increased number of shares, and the issuance of placement shares remained uncertain.

In April last year, National Tea received BSEC approval to raise its paid-up capital by issuing 2.34 crore shares at Tk119.53 each, inclusive of a Tk109.53 premium per share. The distribution plan allocated 1.24 crore shares to the government, Investment Corporation of Bangladesh, and Sadharan Bima Corporation at an average ratio of 4.43 new shares for each existing share. Sponsor-directors were allocated 13.8 lakh shares at a ratio of 3.21:1, and general shareholders were to receive nearly 96 lakh shares at a 2.85:1 ratio.

As of Wednesday, National Tea shares closed at Tk388.60 each on the Dhaka Stock Exchange. Founded in 1978 and listed on the capital market in 1979, National Tea cultivates, manufactures, and sells tea and rubber in the local market. The company’s average annual production is about 52 lakh kg of tea, most of which is sold through the Chattogram auction market.

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