Dhaka Stock Exchange suffers major technical glitch to open week

Trading at Dhaka Stock Exchange (DSE) was halted by nearly four hours on Sunday as a major technical glitch made the market operator unable to begin trading at its usual 10:30 am opening time.

Bangladesh Securities and Exchange Commission (BSEC) Executive Director Mohammad Saifur Rahman told BSS that the commission was aware about the technical problem and was expecting a full report from the DSE authorities about the matter in due course.

“Due to a technical issue DSE delayed commencement of trade by 3 hours 50 minutes on 24^th May 2015. This delayed start resulted in a shorter trading period of 1 hour 40 minutes compared to 4 hours of normal trading,” DSE said in a press statement later on the day.

The stock exchange also regretted the disruption of trading that caused inconvenience to all market participants.

DSE said that the technical issue caused delay in disseminating trade related information to some brokers beyond acceptable limits, and thus the brokers were put at a disadvantaged position compared to its peer group.

“In order to prevent this situation arising, DSE took the decision to delay trading till all market participants had equal opportunities to trade”, the statement said.

It further said that DSE and its international technology partners worked in three jurisdictions to resolve this issue and to open trading facility as soon as possible.

The combined effort of all those involved has resulted in market opening at 2:20 pm for all brokers, albeit for a truncated trading session of 1 hour and 40 minutes till 4pm.

The shorter than usual trading session recorded transaction volume of 8.58 crore shares worth Taka 343.17 crore, which was more than 50 percent lower than the volume and value of a normal trading session.

The decline in daily transaction caused fall in the two selective indices, but the broader DSEX index managed to finish the day marginally up at 4484.62, with DS30 and DSES closing down at 1682.44 and 1081.40 respectively.

Prices of 108 stocks advanced on the day against 164 declining stocks, while 28 remained unchanged. Power Grid, SA Port, Rupali Bank, ICB Sonali 1stMF and Saif Power were the day’s major gainers.

The major gaining sectors were bank, fuel and power, engineering and miscellaneous when the major losing sectors were textile, telecom, mutual fund and ceramic. Among the major lagging securities were Family Tex, Beximco, Zaheen Spin, 7^th ICB and Republic Insurance.

UPGDCL topped the turnover list followed by KPCL, Saif Power, SA Port, BSCCL, UPGDCL and Ifad Autos.

Normal trading DSE will resume tomorrow (Monday) on schedule time at 10:30 am.

Chittagong Stock Exchange (CSE) began the week at its normal scheduled and closed the session positive. The general CSCX index finished the day up at 8458.35 though most of issues traded closed lower. Prices of 128 securities declined on the day against 80 advancing and 27 static issues.

Some 2.35 crore shares worth Taka 81.32 crore changed hands on the day. (Source: BSS)

Dhaka stocks plunge further on persisting sale pressure

Share prices continued to fall across the board on Dhaka Stock Exchange (DSE) as a persisting sale pressure created high supply-demand mismatch.

The daily transaction increased at the bourse mainly because of voluminous shares’ offloading by the investors on selling spree, which at the end of the session pushed all the three indices towards record low in past few months.

After hitting over 8-month to close the previous session, the broader DSEX lost 52.22 points to finish Tuesday’s session at 4345.03, with the blue-chip DS30 and Shariah DSES plunging at 1669.16 and 1064.21 respectively.

The trade volume at Tuesday’s close rose to 6.90 crore shares and the value to Taka 325 crore from Monday’s 6.53 crore worth Taka 305 crore. The higher activities on the supply side effectively created a mismatch with the demands on the market, forcing issues from all sectors to close lower.

Out of traded 308 issues, 246 incurred losses when only 39 managed to close moderately higher and 23 remained static.

Prime Textile, Shurwid Industries, Union Capital, Samata Leather and Continental Insurance were the worst losers.

Among major advancing issues, United Power finished the session significantly higher with over 15.0 percent rise on its post disclosure trading. The company got good response from investors after announcing Taka 59.64 crore profit after tax.

The other major gainers were Pharma Aid, IFISLMF1, Ambee Pharma and Reliance Insurance.

United Power topped the trading list followed by Ifad Autos, ACI, MJLBD and Grameenphone. (source: bss)

ICB-run MF’s trading on despite tenure expiry

The trading of the units of the Investment Corporation of Bangladesh-run First ICB Mutual Fund continued at the Dhaka and Chittagong stock exchanges illegally on Wednesday despite that fact that the tenure of the fund expired on March 31.

As per the mutual fund rules, the stock exchanges delist a MF after the end of its tenure.

A senior official of Dhaka Stock Exchange told New Age on Wednesday that the trading of the units of First ICB Mutual Fund continued at the bourse despite expiry of its tenure on a verbal instruction from the capital market regulator.

He said that senior officials of the Bangladesh Securities and Exchange Commission also told them that the tenure of the fund would be extended by three months with effect from April 1 within this week.

The regulator, however, is yet to issue any directive in this regard.

A BSEC senior official on Wednesday told New Age that the commission on Tuesday held a meeting in this regard and found no valid ground to approve ten-year tenure extension plea made by the ICB for eight mutual funds it runs.

He said the commission would extend the tenure of First ICB Mutual Fund by three months from April 1.

As per the mutual fund rules, the tenure of close-ended mutual funds should not exceed 10 years.

Despite the legal bar, the units of the eight ICB-run mutual funds have been trading at the DSE for 18-34 years.

The BSEC in November last year, scrapping an ICB plea for ten-year time extension for the eight mutual funds, asked the state-owned entity to convert or windup the close-ended MFs within December 2016 one by one starting from First ICB Mutual Fund, enlisted with the stock exchange in 1980, within March.

The commission at the same time also warned the ICB for not complying with earlier regulatory directive that had asked the entity to convert or windup all eight ICB-run mutual funds within December 2014.

Another BSEC official told New Age that despite ICB’s repeated violation of securities rules in this regard, the commission refrained from taking any tough measure against the entity due to the ICB’s strong lobby with the government’s influential quarter.

The ICB, ignoring the BSEC directive issued in November, lobbied the finance ministry to press the BSEC for extension of the MFs’ tenures, BSEC officials said.

Following pressure from the finance ministry and some other influential quarters, the capital market regulator agreed to consider the ICB’s proposal for tenure extension within legal framework, they said.

After getting BSEC’s green signal, the ICB as per its board decision on January 22 sought another ten-year tenure for its eight MFs by handing over the management of the funds to ICB Asset Management Company, they said.

As the commission found the proposal unlawful, the ICB filed another proposal to the commission last month.

The proposal said that as per the legal framework, other firms would be the trustee and custodian of the funds while the ICB would be the sponsor of the funds and would hold 10 per cent stake in each fund.

Even after the formulation of the mutual fund rules in 2001 that separated functions of sponsor, asset manager, trustee and custodian, the ICB has been doing all of these jobs violating securities rules.

The BSEC earlier rejected AIMS of Bangladesh’s plea for extension of tenure of its two mutual funds by 10 years. (Source: New Age, April 2, 2015)

Dhaka stocks fall as investors stare at city polls affairs

Dhaka stocks returned to the negative zone on Wednesday after a bull run in the previous trading session due to profit-taking share sell-offs in late trading amid an apprehension that the political situation might worsen again with the cancellation of mayoral candidature of two BNP-backed aspirants by the Election Commission.

The key index of Dhaka Stock Exchange, DSEX, fell by 0.38 per cent, or 17.37 points, to close at 4,513.10 points.

The turnover, a key indicator of the market, also declined to Tk 359.71 crore on the day compared with that of Tk 452.72 crore in the previous trading session. The turnover at the bourse had hit its four-month high on Tuesday following talks about formation of a forum to sort out the problems of the capital market-related entities.

Market operators said the market began the day on a positive note but failed to sustain the vibe amid profit-taking share sell-offs in late trading session.

Besides, investors were apprehending that the rejection of candidature of Abdul Awal Mintoo for the mayoral post of the Dhaka North City Corporation by the Elections Commission on Wednesday would be a factor in making the BNP’s final decision on its participation in the city corporation polls, they said.

Investors who were on the sidelines for the last couple of months have become active recently on the trading floor amid expectation that the political situation would ease with the BNP-backed candidates duly submitting nomination papers to the Election Commission, operators said.

The Shariah index of the bourse, DSES, fell marginally by 0.40 per cent, or 4.46 points, to close at 1,098.66 points on the day.

DS30, the blue-chip index of the DSE, declined to 1,719.88 points, shedding 0.49 per cent or 8.59 points.

‘The DSEX fell by 17 points today [Wednesday], reversing the day’s robust start,’ IDLC Investments said in its daily market commentary.

It said impatience and uncertainty on the part of the investors could be the main catalysts behind the current zigzag move in the index.

‘Investors maintained their interest on particular stocks and sectors as pharmaceuticals captured 19.2 per cent of the total turnover,’ said IDLC.

‘Today’s trading session started with a positive mood, but at the end of the day it ended up in the red territory as prices of most of the large cap stocks declined on the day,’ LankaBangla Securities said in its daily market analysis.

MJL Bangladesh led the turnover leaders on the day with its shares worth Tk 22.31 crore changing hands.

Square Pharmaceuticals, Grameenphone, ACI Limited, Shasha Denims, BEXIMCO, Lafarge Surma Cement, Saif Powertec, Khulna Power and IFAD Autos were among the other turnover leaders.

AB Bank 1^st Mutual Fund gained the most on the day with a 9.09-per cent increase in its share price, while Jute Spinners was the worst loser on the day, shedding 9.62 per cent. (Source: New Age, April 2, 2015)

Six associations to form Bangladesh Financial Market Forum

Six associations related with capital market and money market on Monday decided to form Bangladesh Financial Market Forum with a view to work for their common interest on financial issues.

The decision came at a meeting on the day organised by the Dhaka Stock Exchange Brokers Association of Bangladesh held at the DSE headquarters.

The six associations includes: DSE Brokers Association of Bangladesh, Bangladesh Insurance Association, Association of Bankers Bangladesh, Association of Asset Management Companies, Bangladesh Merchant Bankers Association and Bangladesh Leasing and Finance Companies Association.

DSE Brokers Association convener Ahsanul Islam presided over the meeting where Association of Bankers Bangladesh chairman Ali Reza Iftekhar, Bangladesh Insurance Association president Sheikh Kabir Hossian, Association of Asset Management Companies president Md Fayekuzzaman, Bangladesh Merchant Bankers Association vice-president Md Moniruzzaman, Bangladesh Leasing and Finance Companies Association member Akter Hossain Sannamat, DSE Brokers Association members Mizanur Rahman Khan, Minhaz Mannan Emon, Khugesta Nur-E-Naharin, Mostaque Ahmed Sadeque, M Moazzam Hossain and Md Zahirul Islam were present.

Ahsanul after the meeting told reporters that the representatives of the six associations have agreed to work jointly for the development of capital and money markets.

‘We will advocate to the government and regulatory bodies regarding issues and problems that should be addressed and resolved,’ he said.

The number of members of the forum may increase in the coming days if other associations become interested to join the forum.

Bangladesh Insurance Association presided Sheikh Kabir Hossian said that the forum will initially work for the development and restoration of investors’ confidence over the capital market, but gradually it will work for overall economy.

ICB managing director Md Fayekuzzaman said that the overall economic development is related with both capital market and money market, that is why the forum will work for both the markets.

Speaking about the development, Fayekuzzaman said that the high cost of fund has made it difficult for the merchant banks and brokerage houses to invest in the market.

Low interest loans for the brokerage houses and merchant banks can solve the problem and enhance their capability to take part in market development, Fayekuzzaman, also president of Association of Asset Management Companies, said. (Source: New Age, March 31, 2015)

Dhaka stocks slide on fresh political worries

Dhaka stocks went negative on Monday after investors’ heavy buying spree in last two trading sessions amid enforcement of 48-hour strike by the BNP-led allies that made investors skeptical about the party’s stance on city corporation elections.

The key index of Dhaka Stock Exchange, DSEX, fell by 1.07 per cent, or 48.79 points, to close at 4,509.28 points on the day.

Investors became skeptical about BNP’s stance on the city corporation elections as the party on Sunday evening called a 48-hour strike from Monday excluding Dhaka and Cittagong, market operators said.

Investors since the declaration of election schedule for three city corporations have been keeping close eye on BNP’s stand regarding elections, they said.

Operators said that investors were thinking that BNP’s participation might ease the political situation while their boycott of the election might result in extension of the political unrest.

Investors on Sunday went for heavy buying of shares as the main opposition did not declare any strike on Saturday breaking last three months’ trend of their movement.

The market was on the decline for last three months as the BNP-led alliance since January 5, the first anniversary of the one-sided elections, continued to enforce strikes except the weekly holidays supplementing countrywide nonstop blockade.

DS30, the blue-chip index of the bourse, declined at 1,717.48 points, adding 1.17 per cent or 20.39 points on Monday.

The Shariah index of DSE, DSES, closed at 1,096.69 points, slipping by 1.30 per cent or 14.54 points.

Turnover of DSE declined to Tk 314.93 crore on Monday compared with that of Tk 393 crore in the previous trading session.

Of the 306 shares and mutual funds traded on the day, 76 advanced, 198 declined and 32 remained unchanged.

Grameenphone led the turnover chart on the day as its shares worth Tk 28.54 crore changed hands.

ACI Limited, Shasha Denims, Lafarge Surma Cement, IFAD Autos, MJL Bangladesh, Pharma Aids, Western Marine Shipyard, Square Pharmaceuticals and ACI Formulations were among other turnover leaders.

Pharma Aids gained the most with a 7.46-per cent increase in its share prices, while One Bank was the worst loser, shedding 18.59 per cent. (Source: New Age, March 31, 2015)

Bangladesh: Tax-free limit of stock capital gain to be raised to Tk 20 lakh

Dhaka, June 27 (New Age): The government is likely to increase the limit of tax-free capital gains from stock investment for individual investors to Tk 20 lakh from the proposed Tk 10 lakh amid protest from the investors, officials of the National Board of Revenue said.

The government may also reduce the proposed tax on realised capital gains and increase the slabs of gains bowing down the tremendous pressure from the stock market players, they said.

In the last moment, the revenue officials on Thursday prepared an amendment proposal of the Finance Bill-2014 following the instruction from the finance minister Abul Maal Abdul Muhith.

According to the proposal, individual investors will have to pay tax at the rate of 2 per cent on capital gains from Tk 20 lakh to Tk 50 lakh in the coming fiscal year of 2014-15.

Tax will be imposed at the rate of 3 per cent on capital gains above Tk 50 lakh, officials said.

Earlier on June 5, Muhith proposed in the finance bill to impose tax on capital gains for the first time in the country.

The proposed tax rate was 3 per cent on capital gains above Tk 10 lakh but less than 20 lakh, 5 per cent for above Tk 20 lakh.

Tax-free limit of capital gains was proposed at Tk 10 lakh.

Earlier this week, finance minister in a meeting with the NBR officials organised for finanlising amendment of the finance bill categorically instructed for not to change the proposed tax rate and tax-free limit.

By this time, Bangladesh Securities and Exchange Commission, Dhaka Stock Exchange and Chittagong Stock Exchange mounted pressure on the NBR and lobbied with the government high-ups to withdraw the proposed tax.

The country’s two bourses also reacted sharply to the ups and downs in the capital market.

Experts also criticised the decision saying that though the imposition of tax on higher capital gain was right but it was not the right time to do so and the decision would put a negative impact on the already volatile market.

Muhith, returning from Jeddah on Thursday morning, asked the revenue officials for changing the tax rate and tax-free threshold, officials said.

By the evening, the amendment was sent to the law ministry for vetting, they said.

The proposed amendment is final and it will not be changed unless the prime minister instructs otherwise, officials said.

The NBR also finalised an upward revision of the proposed tax exemption limit on dividend income increasing the amount to Tk 20,000 from the proposed Tk 15,000.

Currently, stock investors enjoy tax exemption on dividend up to Tk 10,000.

NBR officials said that the government imposed tax on realised gains to boost revenue collection from the sector.

The initiative was just and fair taking the amount of realised gains into consideration.

‘An investor who has high capital gains from the capital market should pay tax and the proposed slab at Tk 10 lakh capital gains in a year for imposing tax was reasonable,’ an official said.

Small investors who are dominating in the market would not be affected by the decision, he said.

Finance minister was also convinced and decided to not to change the proposal till Sunday, but he has to bow down to the pressure from beneficiaries to review the proposal, he said.

There are approximately 29.79 lakh beneficiary owner’s accounts in the country.

The revenue board expected to collect nearly Tk 200 crore from tax on capital gains. Now the amount will be significantly low.

Bangladesh: Dhaka stocks end positive

Dhaka, June 27 (New Age): Dhaka stocks ended positive on Thursday, last trading session of the week, but turnover at the bourse dropped as some investors remained cautious ahead of the budget approval.

The benchmark general index of the Dhaka Stock Exchange, DSEX, finished at 4,409.42 points, adding 0.13 per cent or 5.77 points.

Turnover of the bourse declined to Tk 302.78 crore on the day from Tk 337.72 crore in the previous trading session.

Market operators said investors were little-bit cautious ahead of the final approval to the proposed budget for the fiscal year 2014-2015.

The government in the proposed finance bill imposed 3-5 per cent gain tax on individual investors and scrapped 10 per cent tax rebate for the listed companies that had kept investors pessimistic for two weeks after the budget proposals.

Investors became hopeful after the Bangladesh Securities and Exchange Commission and the bourses had requested the finance minister, AMA Muhith, to scrap capital market unfriendly proposals from the budget, they said.

Operators also said that investors were hoping that the proposals would be reviewed by the government.

DS30, the blue-chip index of the DSE, however, closed negative at 1,616.57 points, shedding 0.16 per cent or 2.74 points.

The Shariah index of the bourse, DSES, slipped by 0.10 per cent, or 1.01 points, to close at 1,006.22 points.

Of the 294 shares and mutual funds traded on the day, 152 advanced, 104 declined and 38 remained unchanged.

‘FY 2013-14 is close to its end and the bourse observed June-impact, lately,’ IDLC Investors said in its daily market commentary.

Most of the individual investors started positioning on the hope of getting tax rebate on their income, it said.

‘Accordingly, they preferred selective lucrative scrips, fundamentally as their safe investment,’ it said.

‘Meanwhile, budgetary hopes still prevailed,’ said IDLC.

But, this rebate seeking money flow was out-weighted by the inactivity of large investors, it also said.

Bangladesh Export Import Company traded the most with its shares worth Tk 24.08 crore changing hands, while share prices of the company advanced by 7.90 per cent on the day.

Bangladesh: Govt unlikely to withdraw tax on stock investors’ capital gains

Dhaka, June 24 (New Age): Tax on realised gains from stock investment is likely to remain unchanged in the next budget as the government decided not to change the provision in the proposed Finance Bill-2014, officials of the finance ministry said. On the other hand, the government may increase the tax exemption on dividend income up to Tk 20,000 that the investors get from the listed companies from the proposed Tk 15,000, they said. The government may also offer tax rebate for the companies listed in the share market. The companies which will pay dividend more than 40 per cent will get 10 per cent tax rebate on their income tax, according to the proposed amendment. Earlier, companies would get 10 per cent rebate if they gave 20 per cent dividend but the provision was scraped in the proposed finance bill. The government may also exclude from the finance bill a provision that proposed to allow cost and management accountants to conduct audit and certify financial reports under the tremendous pressure from the Institute of Chartered Accountants of Bangladesh. It may also scrap a provision making mandatory for partnership, enterprises and professionals with income exceeding Tk 5 crore a year to submit audited account statements to the NBR. Finance minister AMA Muhith on June 5 placed the finance bill in parliament proposing 3 per cent tax on individual investors with more than Tk 10 lakh but less than Tk 20 lakh capital gain in a year from the stock market and 5 per cent tax on capital gain above Tk 20 lakh. Investors protested against the decision and demanded withdrawal of imposition of gain tax. The country’s two bourses also reacted sharply with ups and downs in the market. Experts also criticised the decision saying that though the imposition of tax on higher capital gain was right but it was not the right time to do so and the decision would put a negative impact on the already volatile market. The National Board of Revenue officials said that the finance minister on Sunday instructed them to keep the provision unchanged in a bid to bring people with more income under tax net and collect revenue from the sector. The government thinks that those who earn above Tk 10 lakh a year from share market should pay tax, they said. Small and medium investors will not be affected due to the imposition of gain tax, they said. Earlier, capital gain from the stock market was tax-free. Bangladesh Securities and Exchange Commission, Dhaka Stock Exchange and Chittagong Stock Exchange were demanding to scrape the new provision saying that the imposition of gain tax would create significant effect on the market. On the other hand, investors get tax exemption on dividend up to Tk 10,000 and they have to pay tax at the rate of 10 per cent on the amount above Tk 10,000. In the proposed finance bill, the government proposes to increase the tax-free dividend to Tk 15,000 which now will be Tk 20,000. Demutualised DSE and CSE will enjoy tax holiday for the next five years until in a way the finance minister proposed in the finance bill. Finance minister proposed tax holiday in a graduated rate for the exchanges but they demanded for absolute tax holiday for next 5 years.

Dhaka Stock Exchange to oppose Orion Pharma’s IPO approval

Dhaka Stock Exchange has decided to oppose the initial public offering of Orion Pharma that the Securities and Exchange Commission approved last month.

The DSE board in a meeting on Thursday made the decision after hearing the observations of an committee of experts.

The DSE panel pointed out a number of questionable features in the IPO prospectus of Orion Pharma including unjustified asset revaluation, slow growth in core business and misleading information in the financial statement.

The DSE panel said that the Tk 60 offer price of the Orion Pharma’s shares, including Tk 50 premium, was unreasonable, and also questioned SEC’s hurried move to approve the revised IPO proposal.

The SEC approved the revised IPO proposal of Orion Pharma on October 16 with offer price of Tk 60 within two days after the company submitted the proposal.

According to the panel’s observation, the company re-evaluated its fixed asset twice, in 2008 and 2011, where the value of Tk 59.09 crore worth assets stood at Tk 117.22 crore.

The panel said such re-evaluation of depreciable fixed assets was unjustified.

It also observed that the re-evaluation of Orion Pharmaceutical’s subsidiary companies, IEL Consortium and Associates and Dutch Bangla Power, was also unjustified.

The IEL Consortium re-evaluation surplus was shown at Tk 28.56 crore on December 2011 whereas the company started its commercial operation in May 2011.

The Dutch Bangla Power’s re-evaluation surplus was shown at Tk 41.54 crore on December 2011 whereas the company started commercial operation in July 2011.

Dhaka Stock Exchange to oppose Orion Pharma’s IPO approval

‘The panel strongly believes that the re-evaluation of such a new company prior to commercial operation was unusual and motivated, meant to inflate the net asset value to achieve higher offer price,’ it said.

The panel also observed that among the Tk 702.63 crore consolidated revenue of the company in 2011, Orion Pharma contributed only 25 per cent whereas the subsidiary companies contributed 75 per cent.

The project life of both the subsidiaries is 15 years which will hamper the interest of the long-term investors, it said.

The financial statement of Orion Pharma in 2011 showed that the investment of the company in Orion Holding Ltd was Tk 9.96 crore whereas the financial statement of Orion Holding in the same period showed the same investment to be Tk 9.60 crore.

The panel also found Orion Pharma violating the Companies Act 1994 as the managing director of the company is also the managing director of the two other subsidiaries of the company.

Section 109 of the Companies Act 1994 bars any such practice unless the government’s permission was taken is this regard.

Orion Pharma is yet to receive any permission from the government to let its managing director run other subsidiary companies.

‘The SEC should reconsider the approval of Orion Pharma for the greater interest of the investors,’ the panel concluded.

‘We will submit the panel’s observations and board’s decision about Orion Pharma to the SEC this week,’ a senior official of the Dhaka Stock Exchange told New Age.