Govt revenue from DSE hits 10-year low

Prolonged trading suspension due to virus scare, sluggish turnover hit the earnings

Babul Barman | Thursday, 9 July 2020

The government's revenue earnings from the Dhaka Stock Exchange (DSE) hit more than 10 years low to Tk 1.04 billion in the just concluded fiscal year (FY) 2019-20due to bearish market trend.
Market operators said the sluggish market turnover coupled with trading suspension for more than two months due to Covid-19 outbreak hit the government's revenue earnings from the prime bourse.
Trading on the bourses remained shut for 66 days (March 26 to May 30), the longest closure of the market since the Liberation War, due to government holidays as part of its efforts to contain the spread of the deadly Covid-19 virus.
The government bagged revenue worth Tk1.04 billion in the FY 2019-20, which was Tk 2.51 billion in the FY 2018-19, registering a decline of 58 per cent, according to statistics from the DSE.
It was also the lowest revenue earnings from the DSE since the stock market debacle in the FY 2010-11.
Of the total earnings in the FY2019-20, Tk689 million came from the TREC (trading right entitlement certificate) holders' commission, popularly known as brokerage commission.
And Tk346 million came from the share sales by sponsor-directors and placement holders, the DSE data shows.
The DSE, on behalf of the government, collects the tax as TREC holders' commission at a rate of 0.05 per cent and from sponsor-directors' and placement holders' shares sales at a rate of 5.0 per cent. The bourse then deposits the amount to the public exchequer.
"The earnings are related to turnover. It's usual that tax will fall if turnover declines," said an analyst at a leading brokerage firm.
He noted that as the turnover marked a decline in just concluded fiscal year compared to the previous fiscal, so did the tax.
The daily turnover, the important gauge, came down to Tk 3.81 billion on average in the FY 2019-20, down 38 per cent over the previous fiscal's average of Tk6.14 billion.
The daily turnover at the DSE also tumbled to a 13-year low twice in June as nervous investors were unwilling to buy shares even at the lowest possible prices amid growing concerns over the Covid-19 pandemic and floor price limitation.
DSEX, the benchmark index of the DSE, lost 1,432 points or 26.56 per cent in the just concluded fiscal year.
Market capitalisation of the prime bourse also shed 22 per cent in the outgoing financial year to Tk 3,119 billion.
The DSE paid tax worth Tk 2.72 billion in FY 2011-12, Tk 1.27 billion in FY 2012-13, Tk 1.54 billion in FY 2013-14, Tk 1.74 billion in FY 2014-15, Tk 1.58 billion in FY 2015-16, Tk 2.46 billion in FY 2016-17, Tk 2.33 billion in FY 2017-18 and Tk 2.51 billion in FY 2018-2019 on TREC holders' commission and share sales by sponsor-directors and placement holders.
However, the DSE paid tax worth Tk 4.47 billion in the FY2010-11, the highest in its history, when the market witnessed a wild trend before crashing.

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