The initiatives taken by the government in the financial year 2012-2013 to boost the stock market failed as the Dhaka stocks dip further in the financial year after
witnessing a massive fall in the previous FY 2011-2012.
The old key index of Dhaka Stock Exchange, DGEN, lost 4.09 per cent or 187.11 points in the last financial year after losing 25 per cent or 1,545 points in the FY 2011-2012.
On June 30, the last day of the FY 2011-2012, the DGEN was at 4,572.87 points which came down to 4,385.76 points on Sunday, the last trading session of the financial year 2012-2013.
Market analysts said the government’s steps failed to improve the investors’ confidence on the market as the steps either were not sufficient or unrealistic.
They said the gloomy economic condition in the country might be another reason for the deteriorating condition of the stock market.
Confrontational politics across the country was another reason for the shakiness in the investors’ confidence, they said.
The government in the last and the current national budgets allowed investment of undisclosed money in the capital market by paying a 10-per cent tax.
The government also restored the provision of offering 10 per cent income tax rebate to individual investors and waived the capital gain tax for foreign investors and non-resident Bangladeshis in the last year budget.
‘The existing economic condition has affected the capital market. If the economic condition of the country improves, the stock market will do better,’ former Bangladesh Securities and Exchange Commission chairman Faruk Ahmed Siddiqi told New Age.
‘Budgetary incentives will put little impact on the stock market unless the profitability from the stock market increases,’ he said.
‘The stock market should run on its own way rather than on frequent incentives which always distort the investment condition of the capital market,’ he added.
The BSEC in the last financial year allowed 15 new companies to raised fund from the stock market.
But the indices of the bourses declined despite listing of the new shares due to a dull market.
Union Capital’s chief executive officer Akter Hossain Sannamat said the political instability across the country was the main reason for lack of confidence of investors on the stock market.
As the political situation improved recently, investors’ activities on the trading floor increased that pushed the turnover of the bourses up, he added.
DGEN, the benchmark general index of the DSE, plummeted to a five-year low to 3,617.35 points on April 29, 2013.
The DGEN stood at 3,383.23 points on November 11, 2009, from which it soared to the highest-ever level of 8,918.51 points on December 5, 2010.
The market situation started to improve after the government on May decided to refinance Tk 1,266 crore for the stock market to implement the scheme for the investors affected by the stock market crash in 2010. The Bangladesh Bank, however, following the finance ministry’s decision on refinance structured a fund of Tk 900 crore for the stock market.
The government in its budget for this financial year announced a set of proposals for the stock market ahead of the next general elections. The proposals included increasing tax-free income from the capital market up to Tk 10,000 from the existing Tk 5,000 for the financial year 2013-2014. Finance minister AMA Muhith also announced 15 per cent tax rebate against investment in the private mutual funds.
-With New Age input
