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DSE daily turnover hits 10.5 yrs high

‘Last minute rush to whiten black money’

FE REPORT | June 07, 2021 00:00:00

The daily trade turnover on Dhaka Stock Exchange (DSE) climbed to 10 and a half years high on Sunday since the country's stock market developed bubbles that soon burst.

Turnover, a crucial indicator of the market, jumped to Tk 26.69 billion on the country's premier bourse, by 22 per cent over the previous day's tally of Tk 21.82 billion.

It happens to be the biggest single-day transaction volume since December 6 in 2010, when the turnover scaled a record amount of Tk 27.10 billion.

However, the all-time-high turnover on the DSE was Tk 32.49 billion recorded on December 5 in 2010, when the market saw a bull run before a crash. The then key index - DGEN -- also peaked at 8,918 on that fateful day.

Experts find reasons for the present bullish trend in the stock trading because of lower returns on the money market, limited scope of investment in other instruments, regulatory reforms and earnings surprises by the listed firms despite the pandemic.

The last minute rush to take the advantage of whitening black money through investment in the capital market by the end of this month might also have a contribution to push up the turnover, they said.

"As the deposit rate is very low in the banks, some investors are diverting their funds from the money market to the equity market," said a merchant banker, seeking anonymity.

He noted that the stock market regulator took some proactive measures in the past few months which boosted the investors' confidence in the market.

The recent growth in turnover and index -- the two most important indicators -- in general suggests that the investors' confidence in the market is back on the ascent, he said.

The investors showed confidence while the institutional and high net worth individual investors were putting fresh funds on stocks on expectation of capital gains from the recent rally, said an analyst at a leading brokerage firm.

"Continuous growth in turnover pushed investors' confidence high and high volume suggested that institutional investors were largely active in the market," he said.

He noted that the investors were relentlessly taking part in the stock market with fresh funds to enjoy the existing tax benefits ahead of the closure of current fiscal year.

However, he advised the investors to know the tricks of trade on the stock market and then invest in shares of their good choices in order to avert any misfortune.

The new budget proposed to cut corporate tax rate for the listed firms by 2.5 percentage points to 22.5 per cent for the upcoming fiscal year.

However, the ongoing facility to invest undisclosed money in the capital market would not be allowed in the next fiscal year.

The expiration of special facility to whiten the black money this month might bring some fresh funds in the market over the next few weeks, commented EBL Securities in its regular market analysis.

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