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BSEC Approves Desco’s Tk607.69 Crore Preference Shares Issuance

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desco Dhaka Electric Supply Desco

The Bangladesh Securities and Exchange Commission (BSEC) has granted approval for the state-owned power distributor, Dhaka Electric Supply Company (Desco) Limited, to issue 60.76 crore preference shares at Tk10 each to the government against a share money deposit.

This decision was finalized in a BSEC meeting on Sunday.

According to Desco’s financial statement up to June 2023, the company received Tk607.69 crore from the government as a share money deposit for its annual development plan. Against this fund, Desco will now issue irredeemable non-cumulative preference shares to the secretary of the Power Division under the Ministry of Power, Energy, and Mineral Resources.

On March 2, 2020, the Financial Reporting Council (FRC) mandated that capital received as a share money deposit, or by any other designation, must be included in a company’s equity. This amount cannot be refunded and must be converted into share capital within six months from receipt.

Such share money deposits are also considered in the calculation of earnings per share (EPS).

Desco has decided to issue preference shares more than three years after the FRC directive.

Preference shares are a type of company stock where dividends are paid to shareholders before ordinary shareholders. In the event of bankruptcy, preference shareholders have priority in receiving payments from company assets over common stockholders.

The irredeemable nature of these preference shares means they will not increase Desco’s paid-up or common share capital. Consequently, the company is not obligated to pay any unpaid preference share dividends from previous years due to the “non-cumulative” nature of these shares.

The proposed conditions imply that if Desco achieves higher profits, the government will receive substantial dividends against the preference shares, whereas in the case of annual losses, no dividends will be distributed.

Since the new shares will not be included in EPS calculations, there will be no direct impact on the company’s financials. However, as preference shareholders, the government will receive dividends before ordinary shareholders, which might ultimately reduce the net profit available for common shareholders.

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Weekly U.S. Stock Market Reports Diverse Performance

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Reviewing the U.S. Stock Markets, the Nasdaq Composite, recorded a decent hike of 555 points, reaching a closing value of 17,688 points by the end of the week. Similarly, the S&P 500 index showed a positive trend, gaining 85 point to settle at 5,431 points. Meanwhile, DJIA Index experienced a notable drop, losing 209 points during the week and concluding at 38,589 points after a week of gaining.

In contrast, Russell 3000 Index saw a gain in week performance, with a slight hike of 40 points to reach 3,077 points by the end of the week.

Moving to Russell 2000 Index, demonstrated a notable drop of 20 point, ending the week at 2,006 points.

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Weekly European Stocks Shows Negative Result

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In the Outgoing week, the European stock market displayed a massive losing performance.

Here is the data on the weekly performance of the European Stock Market, The STOXX Europe 600 index, which is considered a leading benchmark for the European market and covers approximately 90 percent of the market capitalization across 17 countries, reported a drop of 12.5 points to close at 511.05.

The United Kingdom’s FTSE 100, one of the most widely followed indices in Europe, also showed a significant drop, losing 99 points or finishing the session at 8,146.

In Germany, the DAX 30 index, lost by 555 points to reach 18,002, while France’s CAC 498 decreased by 9 points to stop at 7,503 at the end of the trading day.

Italy’s FTSE MIB, which covers the top 40 stocks traded on the Milan Stock Exchange, decreased by 1,995 points to 32,665. However, Spain’s IBEX 35, added by 412 points, to close at 10,992.

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South Asian Stocks Reports Gaining Performance in Recent Week

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A review of South Asian stock markets shows that India’s Bombay Stock Exchange (BSE) index BSE Sensex has added 299 points during the week. At the end of the week, the index stood at 76,992 points. On the other hand, the Nifty-50 index of the country’s National Stock Exchange gained by 175 points last week. At the end of the week, the index stood at 23,465 points.

Pakistan Stock Exchange Index ‘KSE 100’, shed 2,926 points last week. After a week of losing, the index settled at 76,742 points.

On the other hand, The Sri Lankan stock market index adds, and the Colombo Stock Exchange index ‘ASPI’ increased by 208 points in a week. After a week the index settled at 12,314 points.

Bhutan’s stock market index ‘BSI’ added 68 points hence the index stood at 1,515 points throughout the whole week. Nepal’s ‘NEPSE’ gain 35 points, therefore the index stands at 2,112 points.

Hence Dhaka Stock Exchange: The benchmark index ‘DSEX’ dropped by 119.51 points or 2.28 percent, in the outgoing week. At the end of the week, the index stands at 5,117 points.

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