High-value investors grow apprehensive over NBR's inquiry into capital gains data
Stock Market Sheds Points as NBR Gathers Capital One Information
The Dhaka Stock Exchange (DSE) and the Chittagong Stock Exchange (CSE) experienced a downturn on Wednesday, with the DSEX shedding 42 points to close at 5,450, and the DS30 index dropping by 20 points to 2,107. The shariah index also saw a decline, losing 13 points and closing at 1,178.
The CSE followed suit, with the Selective Categories' Index (CSCX) dropping by 46.2 points, and the All Share Price Index (CASPI) falling 78.2 points. Market turnover decreased to a one-month low, falling by 11.25% to Tk655 crore, compared to Tk738 crore in the previous session.
Market insiders believe that the decision to gather information on capital gains exceeding Tk50 lakh in the 2024-25 fiscal year, initiated by the National Board of Revenue (NBR), will have a negative impact on the stock market. Many investors who made profits last fiscal year and reinvested that money into the stock market are now facing losses or only marginal gains and are required to pay tax on the earlier profits, which they consider unjustified.
Abdur Rahman Khan, chairman of the NBR, expressed the need to verify the information of the individuals and entities but declined to comment further. The collected information will be submitted to the Bangladesh Securities and Exchange Commission (BSEC), and then forwarded to the NBR.
Saiful Islam, president of the DSE Brokers Association, stated that they were not prepared for such a step and that it has created discomfort for big investors. Some investors who placed funds under other names may withdraw them from the market due to the prospect of falling under the tax net.
Market participants are waiting for a fresh catalyst to revive momentum as they prefer to observe trends ahead of the upcoming earnings season. A major factor supporting equities is the declining yield on government securities, which analysts expect to fall further. With stock market returns currently above 10%, lower bond yields are making equities increasingly attractive.
Experts expect that the capital market regulator is implementing several positive reforms, some of which are already showing results. Political uncertainty ahead of the national election has eased, and investor confidence has been boosted by positive macroeconomic indicators, such as stabilised foreign exchange reserves and a government plan to merge weaker banks.
However, recent regulatory fines for stock manipulation and ongoing market volatility have further fuelled investor caution. Market participants are hoping for a resolution to the current situation, as many believe that the move could discourage large investors from participating actively, which may also affect general investors.
EBL Securities stated in its daily market review that Dhaka stocks continued to face hurdles as late-hour selloffs weighed on investor sentiment amid ongoing volatility. Market insiders are urging the authorities to address the concerns of the investors and to provide clarity on the matter to restore confidence in the market.
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