Tuesday, November 25, 2014

Stocks plummet for 3rd day on BMBA’s demands

New Age - 25 November'2014 Tuesday

Dhaka stocks declined for the third trading session on Monday due to panic selling following a media report that the Bangladesh Merchant Bankers Association requested the BSEC to bring the investors having above Tk 1 crore in margin loan under the CIB reporting to facilitate recovery of the margin loans.
The key index of Dhaka Stock Exchange, DSEX, finished at 4,768.90 points, shedding 1.43 per cent or 69.20 points.
Market operators said the market was on a downward trend as investors were overreacting to a Bangladesh Securities and Exchange Commission’s latest step regarding Shahjibazar Power Company Ltd’s shares for the last couple of trading sessions.
The media report on the BMBA’s proposal made investors panicky, they said.
A recent BMBA letter sent to the BSEC said, ‘To facilitate the recovery of huge defaulted margin loans, we propose that clients having loan with more than Tk 1 crore should come under the reporting of Credit Information Bureau as we do not have any other functional recourses.’
Operators said investors were anticipating that the market might fall further as it had already declined by around 500 points in the last one and a half months.
DSE managing director Swapan Kumar Bala on Monday at a discussion said, ‘There is a perception among the investors that the market is on decline due to the merchant bankers’ proposal that the capital market regulator should bring investors with above Tk 1 crore margin loan in merchant banks and brokerage houses under the reporting of the CIB of Bangladesh Bank.’
DS30, the blue-chip index of the DSE, closed at 1,753.05 points, slipping by 1.79 per cent or 32.08 points.
The Shariah index of the bourse, DSES, dropped by 2.03 per cent, or 23.04 points, to close at 1,110.58 points on the day.
Of the 302 shares and mutual funds traded on the day, 61 advanced, 199 declined and 42 remained unchanged.
‘Panic-driven selling spree has pulled down the market for the third consecutive session today [Monday],’ IDLC Investments said in its daily market commentary.
‘Apparently, investors focused mostly on selling to minimise further loss in their portfolio as the market continued moving towards bearish zone,’ it said.
‘A total plunge of 565.1 points within the last 30 sessions was well enough to shed off the recent rally,’ it said.
Turnover at the DSE increased slightly to Tk 354.77 crore on Monday compared with that of Tk 348.99 crore in the previous trading session.
Lafarge Surma Cement led the turnover leaders on the day with its shares worth Tk 19.21 crore changing hands.
Square Pharmaceuticals, Grameenphone, Beximco Pharma, Jamuna Oil, BEXIMCO, Barakatullah Electro Dynamics, Khan Brothers PP Woven Bag Industries, Western Marine Shipyard and Meghna Petroleum were among the other turnover leaders on the day.
ICB AMCL 1ST NRB Mutual Fund gained the most with a 5.88-per cent increase in its share price, while Emerald Oil Industries lost the most, shedding 10.51 per cent.

Hamid Fabrics gets DSE approval

FE Report- 25 November'2014 Tuesday
Hamid Fabrics Limited (HFL) got the listing approval from the Dhaka Stock Exchange (DSE) Monday.

The approval came at a DSE board meeting held Monday at the DSE board room chaired by its Chairman Justice Siddiqur Rahman Miah.

Trading date of Hamid Fabrics will be announced soon, said a DSE official. "We will fix the trading date after transferring shares to respective beneficiary owners' (BO) accounts," he said.

Hamid Fabrics was the first in offering issues under the new IPO method through the stockbrokers and merchant banks which aimed to cut down the processing time to three weeks from more than five weeks.

As many as 174 stockbrokers from the Dhaka Stock Exchange (DSE) and 73 from the Chittagong Stock Exchange (CSE) along with 37 merchant banks participated in the Hamid fabric's IPO.

The public subscription of Hamid Fabrics, a sister concern of Mahin Group, was held September 28 to October 2 for resident Bangladeshi while October 11 for non-resident Bangladeshis.

Using the fixed price method, the textile company floated 30 million ordinary shares of Tk 10 each at an offer price of Tk 35, including Tk 25 as premium and raised a fund worth Tk 1.05 billion from public.

The textile company's IPO subscription is oversubscribed around nine times. A market lot is 200 shares.


Brokers for discussion with central bank

FE Report- 25 November'2014 Tuesday
Stock brokers and dealers have urged the management of Dhaka Stock Exchange (DSE) to take initiative with the securities regulator so that the central bank does not conduct unnecessary monitoring over their activities.

They expressed their concern Monday at a meeting arranged to discuss the launching of new automated trading system.

"Stock brokers and dealers who are compliant also face pressure due to day to day monitoring of central bank. That's why the brokers have proposed a discussion with central bank for the sake of reducing panic in the capital market," said a DSE director who attended the meeting.

DSE chairman Justice Siddiqur Rahman Miah presided over the meeting held with top thirty broker-dealers. DSE managing director Swapan Kumar Bala was also present at the meeting.

At the meeting the participants talked about their preparation and possible problems regarding launching the new trading system which will go live on December 11 next.

Brokers have also sought quota in the IPO (initial public offering) like that of Asset Management Companies (AMCs).

Among others, representative of LanakBangla Securities, ICB Securities, AIBL Capital, BRAC EPL Stock Brokerage, IDLC Securities, City Brokerage, MTB Securities, EBL Securities, Shahjalal Islami Bank Securities, Royal Capital and Vision Capital were present at the meeting.


Merchant banks should be re-capitalised

FE Report- 25 November'2014 Tuesday
Experts said the prospects of mutual fund (MFs) have been 'affected' due to controversial activities executed by some Asset Management Companies (AMCs).

They also stressed the possible ways to restore investors' confidence on the MF industry.

"Investors who have not enough time and knowledge normally rely on AMCs. But the prospects of such industry have been hampered as its past is not praiseworthy," said Md. Shakil Rizvi, former president of Dhaka Stock Exchange (DSE).    

The observations came Monday at a round table discussion titled 'Potentiality of Capital Market in Current Perspective' held at the National Press Club, jointly organised by thereport24.com and Appollo Ispat Complex.

Former advisor to caretaker government AB Mirza Azizul Islam attended the programme as chief gust.

Managing director of Chittagong Stock Exchange (CSE) Wali-ul-Maroof Matin said it's not true that there is limitation in rules to take action against the AMCs which misused the MFs.

"The incidents which occurred in the name of managing MFs are nothing else but the incidents of stealing should be addressed strongly for the sake of MF industry," Mr. Maroof said.

He said there is a tendency in Bangladesh to drive cars following red light and stop following green light.

"Similar tendency is observed while purchasing and selling shares in the capital market," Maroof added.   

Prof. Abu Ahmed, key note speaker of the discussion, said state-owned enterprises (SoEs) did not go public despite an instruction of the Prime Minister.

"The SoEs are being used for the interest of some groups. Bangladesh Biman has become a den of theft. How many airlines are run by government in other countries?" Abu Ahmed said.

In this regard, CSE managing director Mr. Maroof said earlier they tried twice to collect a copy of annual report of Bangladesh Biman following the company's the then announcement to go public.

"But we failed to get any copy of the annual report. It seemed that it was something very confidential," Maroof said.   

Former advisor to caretaker government AB Mirza Azizul Islam said there is lacking in the willingness of politics to bring the SoEs to the capital market.

He said market capitalisation of the country's capital market is lowest among Asian countries.

"Capital market should work along with banks in case of proving funds for companies. Besides, coordination is a must among not only market regulators but also different organisations of the government," Mr. Islam said.

While speaking on investors' awareness Islam said investors must remember that they are investing their own money.

Former DSE president Ahsanul Islam Titu said full potentiality of the capital market still remains unused.

"Existing system of allowing companies to go public is just giving feeds to some quarters. A company should fulfill the listing requirements before getting regulatory consent to offload shars," Titu.

DSE managing director Dr. Swapan Kumar Bala said before the demutualisation the relationship between the regulator and exchanges was like that of master and servant.

"After the demutualisation, the relationship between the regulator and exchanges has become amicable and the market is being operated through mutual cooperation," Bala said.

He said a mandatory provision should be included in the Financial Reporting (FRA) so that companies having good fundamentals go public.

Managing director of IDLC Investments Md. Moniruzzaman said merchant banks should be re-capitalised to overcome their prevailing crisis.

Tauhidul Islam Minto, the editor of thereport24.com, chaired the round table discussion arranged on potentiality of capital market.


Sovereign bonds will be issued next year: Muhith

FE Report- 25 November'2014 Tuesday
Finance Minister AMA Muhith said Monday the government will consider issuing sovereign bonds next year to mobilise the required foreign currencies.

"Our foreign currency reserve is quite well this year. So, we are not thinking of issuing the bonds this year, but will consider it next year," Mr Muhith said after a meeting with visiting Swedish Minister for International Development Cooperation Isabella Lovin.

Briefing newsmen after the meeting at his Secretariat office, Mr Muhith said the Swedish minister wanted to know in which areas and how they can assist Bangladesh.

"I asked them to assist Bangladesh on the basis of the five-year (2015-2020) plan, which will be prepared soon," he added.

He said Sweden is Bangladesh's development partner. "The issue of climate change is getting immense importance to them. I informed them that Bangladesh also gives climate change issues the same priority."

Replying to a query, the minister said in the last budget, the power sector got the highest priority. "Human resources will get priority in the next budget, followed by infrastructure development and climate change."

E-mail: syful-islam@outlook.com

AIT pays dividends but individuals still shy of coming under tax net

FE Report- 25 November'2014 Tuesday
Doulot Akter Mala
AIT pays dividends but individuals still shy of coming under tax net

The number of actual personal income tax-payers has been stagnant, if not on the decline, during the last two years.

A substantial part of the individual income tax receipts comes in the form of as advance income tax (AIT). The AIT is deducted at different stages including import activities or from returns on bank deposits, irrespective of whether the concerned individuals are TIN holders or not.

An analysis of available data of FY 2012 and FY 2013 from the National Board of Revenue (NBR) shows that while the number of individual taxpayers, belonging to high and marginal income groups, increased while those who can be categorised as middle-income groups are still shy of submitting income tax returns.

The number of taxpayers, enjoying annual income above Tk 1.0 million almost doubled in a year while individual taxpayers belonging to income group above Tk 0.3 million up to Tk 1.0 million a year declined, said a analysis of NBR annual report data.

Former tax officials and field-level taxmen admitted the number of individual taxpayers is not increasing, in line with the rise in collection of overall income tax receipts.

According to the latest annual report of the NBR, the number of individual taxpayers increased from 1.2 million to 1.3 million earlier in a year but income tax officials themselves expressed doubts over this data.

A senior tax official of NBR said some 1.1 million individual taxpayers submitted their returns in fiscal year (FY) 2011-12 and this declined to 9,50,000 million in FY 2012-13.

In fiscal 2014, some 50,000 new taxpayers were added to the number of income tax returns, he said.

"Taxmen have found the data of fiscal year 2012 as confusing. Some evidence of double counting of tax-returns that year have been detected," he said.

Expansion of tax offices also needed reallocation of some tax files from one zone to another and it might have caused some mistake in counting the number of individual tax returns, he said.

Some people also filed tax returns in the tax-fair that tax offices counted twice, he added.

Former Income tax member Syed Aminul Karim said although the income level of people increased, the number of individual taxpayers does not reflect this.

The marginal group of taxpayers has risen in number because of inflation that included them the under tax-net, he added.

"The raise of AIT resulted in an increase in the number of taxpayers among the high-income group. Contractors as a group are the largest taxpayers among the individual taxpayers," he said.

The ex-member of the NBR appreciated an effective tax policy through national budget for a marked increase of income tax collection.

Another tax official also expressed his wonder over the current stagnant trend about number of individual taxpayers, despite several efforts by the NBR to help widen the tax net.

"I wonder why the number of taxpayers is not increasing. Some 3,00,000 of new taxpayers obtained e-tax identification numbers (TINs), known as online TINs last year who are supposed to submit tax returns this year,"  he said.

The analysis of NBR data showed that the number of individual taxpayers, having annual income above Tk 3,75,000, increased slightly. Some 1,829 taxpayers were added to the tax threshold in FY 2012-13, compared to the corresponding figure of the previous fiscal.

However, there is yet no exact study on how many taxpayers are paying the minimum taxes, how many submit nil returns or how many paid taxes at the highest rate of 25 per cent until fiscal 2013-14.

Tax offices are still maintaining data in a format that was prepared in 2000 on the basis of tax-exempted threshold income for individual taxpayers.

Every year, the research wing of NBR has been collecting data from tax offices across the country in the decade-old format.

According to an unofficial data, taxmen found some 8000 of existing taxpayers have annual incomes above Tk 44,20,000 who would come under the highest tax slab. Also, the income tax slab for the non-resident Bangladeshis (NRBs) has been raised new to 30 per cent from earlier 25 per cent.

The tax offices found that some 5000 taxpayers enjoyed annual incomes above Tk 20 million who paid surcharge last fiscal.

Transparency International Bangladesh (TIB) Executive Director Iftekharuzzaman said the country's various high income groups of people are yet to be fully tax-compliant.

He blamed the nexus of taxmen and taxpayers for losing a large amount of taxes from individual taxpayers.

"Although things are improving but the ratio of tax receipts to the country's gross domestic product (GDP) is still low in Bangladesh, from both regional and the global perspectives," he added.

Common people, he noted, are shouldering the burden of indirect taxes while direct tax collection is not increasing to that extent.

Mr Iftekharuzzaman focused on state support to the citizens who deserve it most, and transparency about public expenditure for motivating the people about the imperatives for paying income taxes.


Stock regulator, NBR must work together for better monitoring - Mirza Azizul Islam suggests at a discussion on stockmarket

Daily Star - 25 November'2014 Tuesday
The stockmarket regulator should work together with the National Board of Revenue to analyse the financial strength of companies that fabricate higher profits with asset re-evaluation.
The NBR can also support the monitoring by providing relevant tax data to Bangladesh Securities and Exchange Commission (BSEC).
The BSEC can then apprehend such companies that seek listings with false financial data, said AB Mirza Azizul Islam, former finance adviser to caretaker government.
He spoke at a roundtable on the prospects of the stockmarket, organised by Appollo Ispat Complex, a steelmaker, and thereport24.com, an online news portal, at the National Press Club in Dhaka yesterday.
Touhidul Islam Mintu, editor of thereport24.com, presided over the event. Law enforcement and judicial action are slow in the country with some of the cases of the 1996 stockmarket crash yet to be resolved, Islam said.
The political interest of ministers and secretaries, and the directorships, cars and flats they get from the companies are the main reasons behind the delay in the listings of state enterprises, he said.
Professional management, good governance and political stability are the main drivers of a dynamic stockmarket, he said.

Financial Reporting Act should be passed in parliament to make the publicly traded companies' financial accounts transparent.
“Some companies' accounts remain non-transparent due to the absence of the Financial Reporting Act. This is resulting in a range of manipulations, including exaggeration of share prices,” he said.
“While registering any company on the stockmarket, the BSEC should conduct a field scrutiny of the companies and check tax documents instead of solely depending on papers prepared by issue managers.”
The rise or fall in share prices depends on companies' audit reports, Shakil Rizvi, a director of Dhaka Stock Exchange.
High standards of audit observed in developed countries should also be maintained in the country to improve the capital market, he said.
“The increase in share prices of a firm should be based on its earnings, assets and the ability to pay out dividends,” he said. “If companies grow, the capital market will experience dynamism and not remain static.”
The DSE will launch some new products through Islamic bonds in the stockmarket, said Swapan Kumar Bala, its managing director. “We have initiated the launch of clearing corporations for derivatives.”
“A commodity exchange will be introduced after establishing clearing corporations. Multi products will be launched once we introduce automation of the DSE which is scheduled for the second week of December,” said Bala.
“The step will ease the trading through iPads and mobile phones. New products will be launched on the DSE through exchange-traded funds,” he said, adding that the 'over-the-counter' market will be the alternative market once it becomes vibrant.
The Financial Reporting Act received the cabinet's final approval on November 10 and could be passed in the next session of the parliament, he said. “But the act has not been made public and I do not know why such a public issue is shrouded in secrecy,” he said.
Pointing to the weakness of fund managers, he said 18 funds were formed between 2010 and 2013, but there was none in 2014.
“This can be attributed to the weakness of fund managers, apart from legal frailty. The regulatory body should be stricter about fund managers,” he said.
He stressed attracting good companies to the capital market, but said some may be deterred by an overly regulated market.
“Many companies do not like the idea of sharing all their information publicly,” he added.
The “right to financial accounts” will boost confidence of investors and their participation in the market will rise manifold, said Md Moniruzzaman, managing director of IDLC Investments. The proper disclosure of financial reports with global accounting standards will help the market grow further, he said.
Some companies show higher profits -- sometimes more than double the market leader's profit, just to be listed on the stockmarket, he said.
Profit manipulation before the initial public offering should be dealt with strictly, he said. 
Some companies issue bonus shares without expansion, which is a bad practice, Moniruzzaman said. Multinational companies announce cash dividends instead of bonus shares, he said.
Published: 12:00 am Tuesday, November 25, 2014

Monday, November 24, 2014

Banks' capital rises

Daily Star-24 November'2014 Monday
Banks' overall capital increased 1.94 percent in the third quarter compared to the previous quarter, as asset quality of most banks improved.
On September 30, their capital was Tk 64,932 crore, which is 10.57 percent of their total risk-weighted assets. The amount was Tk 63,694 crore on June 31.
In line with international standards, banks have to maintain a capital adequacy ratio (CAR) of 10 percent against their risk-weighted assets.
The total capital of state-owned commercial banks increased around 3 percent to Tk 9,531 crore in September as the capital of the banks, except Sonali Bank, marked a rise.
Their CAR now stands at 8.66 percent, which was 8.05 percent three months back, as a result of the overall hike in capital.
The capital shortfall of Sonali stood at Tk 1,730 crore. State-owned specialised banks, except Bangladesh Development Bank, had no capital at the end of September, rather they had negative capital that almost doubled to Tk 8,213 crore.
At the end of June, their negative capital was Tk 4,338 crore.
Of the capital shortfall, BASIC Bank alone accounted for Tk 2,257 crore, while it was Tk 6,090 crore for Krishi Bank, according to central bank statistics.
Of the private banks, three -- Bangladesh Commerce Bank, Premier Bank and ICB Islamic Bank -- saw capital shortfall.
The overall capital of the private banks at the end of September was Tk 51,617 crore, which was 11.99 percent of their risk-weighted assets.
Except for one bank, the foreign banks' capital situation was healthy. On an average, their CAR was 20.61 percent.

Published: 12:00 am Monday, November 24, 2014

Beximco Pharma receives approval from Health Canada

FE Report-24 November'2014 Monday
Beximco Pharmaceuticals Limited., the leading manufacturer and exporter of medicines in Bangladesh, has recently received GMP (Good Manufacturing Practices) approval from the Canadian regulatory authority, Health Canada, according to a statement.

This is for the first time a Bangladeshi company has received this prestigious approval. This opens a new marketing opportunity for Beximco Pharma in the Canadian market and, similar to many other developed countries, Canada is increasingly promoting access to generic drugs. In July this year, Beximco Pharma also received GMP approval from the Taiwan Food & Drug Authority (TFDA), again marking a first time approval for a Bangladeshi company.

Nazmul Hassan MP, Managing Director of Beximco Pharma, said, "Canada is an important market for us and this approval marks a significant milestone for the Company, further validating our high standards of quality and compliance practices.  This approval builds on our existing presence in key regulated markets and is an important step towards our aspiration to become a global generic drug player.''

Turnover hits below Tk 4.0 billion-mark

FE Report-24 November'2014 Monday
Turnover at the Dhaka Stock Exchange (DSE) fell below Tk 4.0 billion-mark Sunday, lowest in the last four months, as investors were reluctant to take fresh exposure in the market amid shaky sentiment.

Turnover, the most important indicator of the market came down to Tk 3.48 billion, which was 29.34 per cent lower over the previous session's value of Tk 4.86 billion. It was the lowest turnover since Tk 3.39 billion on July 24 last.

"The ongoing pessimism kept investors mostly inactive, bringing the turnover to fresh four-month low," said an analyst.

Along with turnover, DSEX, the prime index of the DSE also saw sharp decline. DSEX went down by 61.49 points of 1.25 per cent to close at 4,838.11 points which is more than two months lowest level since September 17.

The other two indices also saw steep decline. The DS30, comprising blue chips lost 29.55 points or 1.62 per cent to close at 1,785.13 points. The DSE Shariah Index shed 12.18 points or 1.06 per cent to close at 1,133.63 points.

"The market hit lowest turnover since July as the market prolonged its negative vibe amidst the lack of confidence among the investors," said International Leasing Securities in an analysis.

The bearish attitude of the investors regarding the market was reflected in the sharp downturn of the index throughout the trading session, said the International Leasing.

LankaBangla Securities said: "Shares hold on to their losses on face of continual selling pressure in market".

"Market might be going through a correction phase, where stocks, which rallied fast in previous months, have now bucked the trend for a while," said the stock broker.

The port city bourse, Chittagong Stock Exchange (CSE) also witnessed sharp decline with its Selective Categories Index - CSCX - lost 115.03 points to close at 9,138.97 points.

Losers beat gainers 165 to 30, with 18 issues remaining unchanged at the port city bourse that traded 7.34 million shares and mutual fund units, turnover value of Tk 268.44 million.


Wednesday, November 19, 2014

Khan Brothers makes flying debut on bourses

FE Report - 19 November'2014 Wednesday
Khan Brothers PP Woven Bag Industries Tuesday made a flying trade debut on the stock exchanges by becoming the top gainer and turnover leader of the day.

Listed with an offer value of Tk 10 each, Khan Brothers PP Woven Bag Industries shares traded between Tk 80 and Tk 47 and closed at Tk 76.6, soaring 666 per cent on the Dhaka Stock Exchange (DSE).

A total of 9.62 million shares worth Tk 588.98 million changed hands in the premier bourse, securing the company top position on the turnover leaders' list.

A total of 14 companies were listed in the Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) this year as on Tuesday in 2014. Of them, Khan Brothers PP Woven Bag Industries is the highest gainer on debut day in 2014.

Khan Brothers PP Woven Bag Industries is the 10th company listed in the miscellaneous category, which accounts for more than 2 per cent of the total market capitalisation on the DSE.

In the port city bourse - CSE, each share of the company ranged between Tk 80 and 50 and closed at Tk 75.5, gaining 655 per cent from its issue price of Tk 10.

The company, which received regulatory approval from the Bangladesh Securities and Exchange Commission in June, floated 20 million ordinary shares at an offer price of Tk 10 and raised a fund worth Tk 200 million from the public. A market lot is 500 shares.

The IPO proceeds are being used for expansion of business 81.29 per cent, repayment of long-term loan 10.50 per cent and working capital purpose 8.21 per cent, according to the company's prospectus.

"The new issue -- Khan Brothers PP Woven Bag Industries attracted the investors most as the company came to with a face value," said an analyst.

A newly listed security is sometimes considered as an instrument for short-term speculation, and many investors want to bet on the shares for short-term gain, he said. "So, it created hype among the investors on the first day of trading."

Meanwhile, the board of directors of the new comer Tuesday declared 10 per cent stock dividend for the year ended 30 June 2014.

The company has also reported NPAT of Tk 74.38 million, EPS of Tk. 1.71, NAV per share of Tk 15.85 and NOCFPS of Tk 1.20 for the year ended on 30 June 2014.

The company provides innovative packaging solutions for different industries by manufacturing tailor made polypropylene fabrics, polypropylene woven bags and polypropylene woven sacks, according to the company's website.


Appollo Ispat's earning zooms up 36.83pc

FE Report - 19 November'2014 Wednesday
The earning of Appollo Ispat Complex Limited, a company listed on the capital market in engineering category, has jumped by 36.83 percent.

The net earning of the company during the first quarter of the 2014-15 fiscal year rose to Tk 135.27 million against Tk 98.85 million of the corresponding period of previous fiscal (2013-14).

The Earnings Per Share (EPS) of the company during the said period under review was Tk 0.54 when the number of shares of the company was 250 million. During the same period of previous year, the company's EPS was Tk 0.66 having 150 million shares, said a press release.

The annual report shows, if the number of shares remained as low as  150 million during 2014-15 fiscal, the EPS could have increased to Tk 0.90.

Considering this, it is assumed that the company's net asset value per share would rise. The company witnesses surge in asset value as its burden on bank interest has been reduced by Tk 20 million because the company's liability has come down.

Besides, the company's has to pay less corporate taxes than before as it has to count 27.50 percent as income tax, down from 37.50 percent being listed on stock market.

For this, the company now saves up to Tk 20 million as income tax.

Meanwhile, the company is going to hold the annual general meeting (AGM) at Dream Holiday at Pachdona in Narsindhi on December 21, 2014 for taking the approval of shareholders for its recommended 15 percent stock dividend and also to approve other agenda.

DSEX dips below 4,900-mark

FE Report - 19 November'2014 Wednesday
Amid weak market sentiment, stocks fell further on Tuesday, with the key index of the premier bourse dipping below 4,900-mark after two months. Investors remained in a cautious mode amid declaration of some corporate earnings.

DSEX, the prime index of the Dhaka Stock Exchange (DSE), dipped below the 'psychological' threshold of 4,900-point after September 18, shedding 18.60 points or 0.37 per cent to close at 4,898.82. DSEX shed 106.8 points in the last four consecutive sessions.

The other two indices also edged lower. DS30, comprising blue chips, dropped 15.04 points or 0.82 per cent to close at 1,814.93. DSE Shariah Index lost 6.23 points or 0.53 per cent to close at 1,150.34.

Turnover remained sluggish, and total turnover on DSE came down to Tk 6.27 billion, registering a decline of 9.26 per cent over the previous day's turnover of Tk 6.91 billion.

The investors mostly focused on power, engineering and pharma, the sectors that accounted for 25 per cent, 17 per cent and 15 per cent respectively of the day's total turnover.

International Leasing Securities said the market endured a typical bearish session, and the key index fell below 4,900-mark for the first time in the last two months with the investors left hanging with hopes of the market's U-turn.

Pessimism among the investors regarding the entire market situation also dragged the turnover, it added.

"Stocks ended the day moderately below the flat line fading the morning gain, as the investors upheld their cautious mode amid declaration of corporate earnings," said LankaBangla Securities.

It also mentioned that several stocks, which declared earnings number late last week, have started reacting to their earnings. In near terms, economic factors are acting as main trigger for market movements.

Inflation is going down, so are interest rates. International oil prices have fallen significantly, which could be advantageous for corporate profitability due to better margins, the stock broker opined.

IDLC Investments said: "As DSEX continued remaining below 5,000-point mark 'psychological' level, fear condensed amid investors and subsequently taking toll on market movements".

Among the large cap sectors, only fuel and power closed positive with 0.65 per cent gain. Telecommunication lost the most of 1.37 per cent. NBFIs and pharmaceuticals retraced 0.67 per cent and 0.16 per cent respectively. Banks as well as food and allied went down marginally by 0.07 per cent each.

Losers outpaced gainers, as out of the 305 issues traded, 147 declined, 125 advanced and 33 remained unchanged on the DSE floor.

Activities decreased in the major bourse, where volume was down by 8.18 per cent, but trade increased by 1.3 per cent. A total of 0.132 million trades were executed with 132.95 million securities of trading volume.

The total market capitalization of DSE stood at Tk 3,267.36 billion against Tk 3,273.36 billion in the previous session.

The new issue - Khan Brothers PP Woven Bag - was the most traded stock with shares worth Tk 588.97 million changing hands, followed by Jamuna Oil, Western Marine, SPCL and BEDL.

Khan Brothers was the day's highest gainer, posting a rise of 666 per cent, while BDCOM Online was the day's worst loser, slumping by 18.24 per cent.

The Chittagong Stock Exchange (CSE) also dropped for the 4th day with its Selective Categories Index - CSCX - lost 46.81 points to close at 9,243.24.

Losers beat gainers 1,140 to 64, with 20 issues remaining unchanged at the port-city bourse that traded 12.50 million shares and mutual fund units, with turnover value of Tk 512.73 million.


Future of hybrid ICB unit certificates-II Is the schemes continuation in perpetuity justified or not?

FE Report - 19 November'2014 Wednesday
Mohammad Mufazzal
Is the schemes continuation in perpetuity justified or not?

The policy about management of capital market-related trust funds, in the nature of Mutual Funds (MFs) and unit funds, is spelt out under securities rules.

But this, according to some market-analysts, is not being properly adhered to, in the case of unit certificates of the government-owned Investment Corporation of Bangladesh (ICB) while fixing the surrender value.

Such analysts largely share the concern of many certificates-holders over the prevailing state of affairs about ICB Unit Fund (IUF). 

Meanwhile, an open-ended fund, under the provisions of Section 51 (2) of Mutual Fund (MF) Rules, 2001, is to be wound up if more than 75 per cent of related holders surrender their units.

Besides, the securities market regulator or the trustees can take the decision about winding up of any such trust fund, if it becomes necessary, for the sake of upholding unit holders' interest.

According to some forward-looking market observers, the Bangladesh Securities & Exchange Commission (BSEC), the regulatory body for the country's capital market, can set a time-limit for winding up the long-running IUF of a hybrid type for ensuring consistency, uniformity and transparency of such a kind of MF.

The existing holders of ICB unit certificates should not also be deprived of their legitimate claims, they noted.

By setting a time-frame for winding up the IUF, the BSEC can consider giving the ICB a choice between letting their existing unit certificate-holders either to opt for any other new product or investment or encashing their existing units, both at actual NAV, they suggested.

Such a move, according to such observers, will help further deepen and widen they base of the country's capital market on some innovative lines. No investors' trust fund, whatever may be its kind, should be allowed to continue in perpetuity, they added.

The securities market watchdog, as competent sources and concerned quarters including the investors do strongly feel, can not keep its eyes shut to the operations of an unlisted security like that of IUF unit certificates that have some strong traits of being considered as a MF.

The existing holders of the certificates of the IUF should, on no logical ground, be deprived of the benefits of market-gains that belong to them, according to them.

However, the watchdog cannot also ignore the possible impact, positive or negative, of this security on the market, in the event of its unbundling or fixing a tenure for folding up of its operations, they added.

"The IUF is beyond our overall supervision. However, we will send a letter to the ICB for submitting the copy of the agreement under which the IUF was floated," one competent source within BSEC told this correspondent.

The BSEC source preferred not saying anything about the operation of the IUF or commenting on the ICB's policy about fixation of the 'surrender value' of the IUF's units.

The officials of the BSEC's concerned department said the ICB do not give annual fees for the IUF.

For the ICB, the hard matters of consequence, according to relevant sources, remain to be: ensuring dividend -- either in cash or in the form of new 'unlisted' units or certificates -- at a higher rate, however modest it may be -- in every successive year to their existing holders, avoiding thereby a 'too heavy' one-time load on its financial operations.

A strong fear, meanwhile, persists among the concerned ICB personnel about market destability, in the event of any large scale 'surrender' of its only 'flagship security' by its holders for reaping 'market' or 'capital' gains.

On its part, the ICB has otherwise an impressive track-record, largely through its subsidiaries, of being quite proactive, some close observers of the market noted.

It has been playing a 'all-weather' supportive role for ensuring both stability and liquidity, particularly in times of adversities of the market, they added.

A member of the relevant committee of the ICB, meant to set the NAV and fix surrender value of the units of the IUF, claimed that the surrender value or repurchase rate of its unit certificates is fixed by evaluating the NAV, period of holding units and some other circumstances as well.

Asked, whether the unit holders who are willing to surrender units are being deprived of 'due' benefits, the member said this issue is a matter of perception.

"However, the surrender value is periodically fixed to encourage long-term investment and to ensure higher rate of dividend on a steady and sustained basis," he told the FE, asking not to be named.

ICB managing director Md. Fayekuzzaman said they manage the IUF in a balanced way.

"Tendency of surrendering units may be triggered if the re-purchase rate is fixed in an imbalanced way. This will also have adverse knock-on effects on the capital market," Mr. Fayekuzzaman observed.

The IUF, he said, plays an important role in promoting industrialisation and also developing the capital market, while providing a reasonable rate of return to the unit-holders on a sustainable basis.

Meanwhile, the job of the auditors -- K. M. Alam & Co and Rahman Mostafa Alam & Co -- that have been appointed to audit the financial statements of the IUF, is mainly to examine statements of its assets, liabilities and profits while authenticating the financial statements, according to sources.

"I think the ICB fixes the surrender value or repurchase rate, as per the conditions set under an earlier agreement," said an auditor requesting for anonymity.

The ICB charges Tk 1.25 per unit (net outstanding) as management fees. It is also the custodian of all assets of the fund.

The ICB realised about Tk 91.42 million and Tk 149.98 million as management fees for the year that ended on June 30, 2013 and on June 30, 2014, respectively. It also received custodial fees worth above Tk 16.73 million for the year that ended on June 30, 2014.

The dividend rate on every unit of the IUF was Tk 22.00 in the financial year (FY), 2008-09, Tk 26.00 in FY 2009-10, Tk 30 in FY 2010-11, Tk 32.00 in FY 2011-12, Tk 36.50 in FY 2012-13 and Tk 40 in FY 2013-14.

In FY 2012-13 and FY 2013-14, fresh units under the CIP that were issued stood, in value terms, at Tk 799.9 million and above Tk 1.01 billion respectively.

Two years back, the ICB introduced 'nominee system' among family members, only to avoid difficulties, consequent upon the death of any or of the unit-certificate holders.

Asked, whether the IUF is an open-ended trust fund or not, ICB managing director Mr. Fayekuzzaman said in the sense of a MF, the IUF cannot be called an open-ended one as only the existing unit-holders are allowed to receive new units or sell their existing ones.


Shahjibazar goes to spot market

Daily Star - 19 November'2014 Wednesday

Shahjibazar Power's share trade will be relegated to the spot market from the public market today.
This means that investors will now have to pay cash for the company's share transactions and have a settlement period of just one day.
Bangladesh Securities and Exchange Commission (BSEC) took the decision yesterday, after looking into the unusual price hike of Shahjibazar shares recently.
The power company's share prices rose 828 percent to Tk 338.8 since its listing on the stockmarket on July 15.
The BSEC also marked Shahjibazar Power stocks as non-marginable, meaning, investors cannot buy those on credit.
Additionally, all stockbrokers will have to submit daily details on the sell and buy of each Shahjibazar share to the stock exchanges, which will send the report to the regulator the following day.
On November 9, BSEC had tasked a two-member committee to report on the unusual price hike of Shahjibazar Power within 15 working days.

The BSEC had earlier found anomalies in the company's accounts and spent Tk 1.72 lakh for a new audit by A Qasem and Company Chartered Accountants.
The company had inflated net profits by Tk 11.68 crore in its financial reports, according to BSEC-appointed auditors, for which the regulator fined five directors of the company Tk 10 lakh each, and the managing director Tk 5 lakh.
Shahjibazar Power shares also faced a trade bar from August 11 to October 20 for the same reason.
The audit firm found that the power company's real net profit was Tk 16.87 crore, with real earnings per share of Tk 1.48, instead of the published numbers.
Shahjibazar raised Tk 31.7 crore from an initial public offer to pay off bank loans.
Meanwhile, stocks continued to fall for the fourth day as investors remained cautious amid corporate declarations, leading to Tk 628 crore in turnover yesterday, a 9 percent decline from the previous day.
DSEX, the benchmark general index of the DSE, closed at 4,898, after shedding 18 points or 0.37 percent.
DSES, the shariah index of the premier bourse, lost 6 points or 0.53 percent, to finish the day at 1,150 points.
Losers beat gainers 147 to 125 and 33 remained unchanged out of the 305 issues that traded on the Dhaka bourse.
A total of 1.32 lakh trades with 12.26 crore shares and mutual fund units took place on the DSE.
Chittagong Stock Exchange also declined yesterday with its selective categories index, CSCX, shedding 46 points to close at 9,243.
Published: 12:00 am Wednesday, November 19, 2014

Khan Brothers flies high on debut despite dismal profit

Daily Star - 19 November'2014 Wednesday

Share prices of Khan Brothers PP Woven Bag Industries soared by eight times on its trading debut at the stock exchanges yesterday, although the company's net profit declined in the first quarter.
Listed with a face value of Tk 10 each, Khan Brothers' share prices ranged between Tk 47 and Tk 80, before closing the day at Tk 76.6 on the Dhaka Stock Exchange.
However, the company's net profit fell 9.54 percent to Tk 2.18 crore in the first quarter to September, compared to the same period in the previous year, according to a posting on the DSE website.
Investment on the new share has become too pricey, as the price earnings (PE) ratio stood at over 50 with the jump in the company's share prices on the very first day.
The PE ratio determines the time an investor needs to wait to get back investment, and it is used to gauge the extent of risk an investment might entail.
“Investors have the right to choose the price at which they will purchase shares. But they should be careful in investing in a company that has been listed without premium and if its share price rises manifold,” said Faruq Ahmad Siddiqi, a former chairman of Bangladesh Securities and Exchange Commission (BSEC).
Many companies have a tendency to show inflated accounts in their initial public offering (IPO) prospectuses to make their offerings attractive, he added.

“The regulator should examine or re-audit to see whether such a thing has happened in the case of the Khan Brothers IPO,” he said.
On the decline in the company's first quarter earnings, Tofayel Kabir Khan, managing director of Khan Brothers, said the disclosed earnings were un-audited and it may be that a company's earnings fall in any given quarter.
“Our business is going well. We are installing new machinery with the IPO proceeds. So, the net profit will increase at the end of the year.”
A total of 96.20 lakh shares worth Tk 58.89 crore traded on the premier bourse yesterday, with Khan Brothers securing the top position on the turnover leaders' list.
It is the 10th company listed in the miscellaneous category, which accounts for around 2 percent of total market capitalisation at the DSE.
The company raised Tk 20 crore by floating 2 crore ordinary shares of Tk 10 each. BSEC approved the IPO on June 24.
The company's IPO proceeds are being used for business expansion and repayment of high interest-bearing loans.
Published: 12:00 am Wednesday, November 19, 2014

Tuesday, November 18, 2014

Stocks fall for 3rd day on selling pressure

New Age - 18 November'2014 Tuesday

Dhaka stocks declined for the third trading session on Monday due to a selling pressure.
The key index of Dhaka Stock Exchange, DSEX, finished at 4,917.42 points, shedding 0.93 per cent or 46.47 points.
Stockbrokers said investors, following the recent downbeat vibe at the market, opted to go slow in taking their next investment decisions.
Mixed earning disclosures by the listed companies also depressed investors, they said.
‘Although, there was no negative news for the capital market, the market declined on the day due to profit-taking share sell-offs by some investors,’ EBL Securities managing director Sayadur Rahman told New Age.
‘As the market rally from July to September had gained around 1,000 points, so profit-taking is still going on and that is very normal,’ Sayadur said.
DS30, the blue-chip index of the DSE, fell by 1.22 per cent, or 22.68 points, to finish at 1,829.97 points on the day.
The Shariah index of the bourse, DSES, closed at 1,156.57 points, declining by 0.87 per cent or 10.19 points.
Of the 304 shares and mutual funds traded on the day, 68 advanced, 200 declined and 36 remained unchanged.
Turnover at the bourse declined to Tk 691 crore on the day compared with that of Tk 753.02 crore in the previous trading session.
‘The market continued to slip down, despite somewhat slowing selling pressure and turnover,’ IDLC Investments said in its daily market commentary.
‘Additionally, news related to soaring defaulted loans in the banking industry kept investors re-thinking before further investment,’ it said.
‘Besides, today’s quarterly earnings disclosures didn’t match with investors’ expectations,’ said IDLC.
‘The market ended the day in red territory again as investors remained confused about future market directions,’ LankaBangla Securities said in its daily market analysis.
‘Despite some mid-cap and large-cap stocks registering favourable earnings in the latest quarter, overall investors’ sentiment remains bearish,’ it said.
Shahjibazar Power Company led the turnover leaders on the day with its shares worth Tk 54.75 crore changing hands.
Western Marine Shipyard, Jamuna Oil, DESCO, Titas Gas, Pharma Aids, Navana CNG, Barakatullah Electro Dynamics, Saif Powertec and Fu-Wang Foods were among the other turnover leaders.
JMI Syringes & Medical Devices gained the most on the day with a 9.95-per cent rise in its share price, while Agni Systems lost the most, shedding 13.37 per cent.