Bourses stumble after budget

The country's both the bourses witnessed a sharp decline Sunday mainly due to investors' dissatisfaction over the proposal of imposing tax on the capital market gains, insiders said.
The Sunday's trading session was the first one after the finance minister announced the national budget for the financial year 2014-15 Thursday.
On the day, the Dhaka Stock Exchange (DSE) benchmark index - DSEX - started its journey with a sharp negative trend, and shed around 2.03 per cent in the first two and a half hours of the session.
At the end of the day's session, DSEX shed 1.14 per cent or 50.20 points to close at 4346.33. DS30 and DSES went down by 22.65 points to 1,600 and by 10.83 points to 997 respectively.
On the other hand, the benchmark index of the Chittagong Stock Exchange (CSE) lost 146.71 points to close at 13390.67.
According to the proposed budget, the individual investors will have to pay 3.0 per cent and 5.0 per cent tax, if their gains exist from Tk 1.0 million to Tk 2.0 million and above Tk 2.0 million respectively.
Former securities regulator chairman Faruq Ahmad Siddiqi said the proposed capital gain tax is very nominal compared to the amount of gains.
"But the government should have proposed the gain tax correctly. Presently the market is struggling, and the tax can be imposed from the next fiscal," Mr. Siddiqi told the FE.
"I encourage the capital gain tax, but at the moment the measure will be impractical, as the investors are yet to overcome the loss incurred during the 2010-11 debacle," said Professor Mahmood Osman Imam of the Department of Finance, University of Dhaka.
He said it has not been mentioned in the proposal of imposing gain tax that it will be deducted after adjusting the loss incurred by the individual investors.
Sheikh Ashraful Haque, chief executive officer of AB Investment, said still now the investors' sentiment is not clear about the proposed capital gain tax.
"The market showed an effort to bounce back Sunday, although it ended the session negatively. Investors may be feeling shaky over the proposed budgetary measures," he added.   
"The day exhibited investors' psychology towards the national budget of FY 15," LankaBangla Securities commented.
Both DSE and CSE Saturday expressed their dissatisfaction over the proposed budgetary measures, and urged the government to reconsider the proposals at their separate post-budget press briefings.  
Among the 289 issues traded on DSE Sunday, 86 advanced, 176 declined and 27 remained unchanged.
The total turnover value at DSE stood at Tk 4.16 billion, which was Tk 4.19 billion in the previous session.
Lafarge Surma Cement topped the turnover list with a turnover value of Tk 502.43 million, followed by BSRM Steel, Grameenphone, Generation Next, Meghna Petroleum and Square Pharmaceuticals.