The stock market of the country has become unstable due to the imposed capital gain. For this, a negative impact was seen in index and trade in almost every day. The investors also have suffered big loss because of the continuous ‘fall’ of share market.
Already, National Board of Revenue (NBR), after getting the suggestion from a donor agency, has decided to impose capital gain on investment in share market and this matter created instability in the market.
Due to this, the Dhaka Stock Exchange (DSE) index has decreased by almost 600 points in a span of two months. The trading rate has come down from Tk 600 crore to Tk 300 crore. Market people say that the country's stock market is currently undergoing a transition. In this situation, imposing new tax burden without giving incentives may create more distrust among the investors towards the market. When the market returns to normal, the government or the NBR could decide to impose a new tax.
It is known that the NBR is thinking of imposing tax on profits of more than Tk 40 lakh of ordinary investors from stock market investments. The organization wants to include the issue in the budget proposal for the next fiscal year (2024-25). In that case the tax rate may be 15 percent. It is said that this initiative is being taken on the advice of the International Monetary Fund (IMF). This news brought in a negative impact on the stock market. However, the regulatory body Bangladesh Securities Exchange Commission (BSEC) Chairman Professor Shibli Rubaiyat-ul-Islam said that the gain tax is not being imposed on ordinary investors. However, this has caused instability in the market. Using this opportunity, the manipulation circle is creating various kinds of rumours.”
On January 21 this year, the floor price of all but 35 companies was increased. After giving away the floor price, the index fell to 6,079 points in a week from 6,346. After that, the market again returned to a positive trend. The index rose again to 6,447 points. Then, the market suddenly became extremely volatile due to the news of imposition of capital gains. Market participants say that there is an economic recession all over the world. Still, the world's major stock markets reached record highs. Stock markets of neighboring countries India and Pakistan are also at record highs. Even Sri Lanka's stock market, which was in the face of economic disaster, has already recovered a lot. The exception in this case is the stock market of Bangladesh. There has been more or less growth in all sectors in the country. But the stock market is going further back. Investors in the country are losing interest in stocks at a time when stock markets in other countries are marching ahead.
The market capitalization of the Dhaka Stock Exchange (DSE) fell by more than Tk 4,000 crore in last week's trading. In the previous week, the market capitalization decreased by about Tk 49 thousand crores. In this, the market capitalization of DSE has decreased by about Tk 53 thousand crore in a span of two weeks. Thus, the share price is decreasing every day in DSE.
DSE Chairman Hafiz Muhammad Hasan Babu said, “Restoring the confidence of common investors in the market is the most important thing at this moment. Therefore capital gains should be withdrawn to give special benefits to the investors. Recently, various media have been publishing news regarding the new taxation of per capita gain on individual investors in the capital market imposed by the National Board of Revenue. There is a kind of fear and panic among market participants and investors. The market is constantly going down due to the effect of this panic. At this time of transition, we request the NBR not to impose a new tax on capital gains considering the interests of investors and capital markets.”
Former president of Bangladesh Merchant Bankers Association (BMBA) Sayedur Rahman said all policies are changing a lot. It is difficult to stabilize the capital market without positive policies. In such a situation, if tax is imposed on capital gains, it is feared that the number of investors in the market will decrease further.
(The report was published on print and online versions of The Bangladesh Pratidin on June 3 and rewritten in English by Lutful Hoque Khan)
