Square Pharma pulls Ctg bourse to post record turnover

Infographics: TBS

Square Pharmaceuticals pulled the Chittagong Stock Exchange (CSE) up to post a record turnover in its history today, despite a drop in indices following the imposition of a tax on capital gains exceeding Tk50 lakh.

On the day, the CSE witnessed its highest ever turnover of Tk624 crore, with Square Pharma alone contributing 38%. The previous highest turnover was Tk623 crore, recorded on 29 October 2023.

During the session, 1.04 crore Square Pharma shares were traded for Tk235 crore, securing the top position in the turnover chart on the Chittagong bourse. 

Alongside Square Pharma, other large-cap stocks also secured positions on the turnover chart, with the top five stocks contributing 82% to the CSE's total turnover.

Shaifur Rahman Mazumdar, managing director of the CSE, told TBS that the today's turnover value was the highest ever recorded.

He further explained that some investors chose to adjust their portfolios on the final trading day of the fiscal year, which contributed to the boosted turnover. "This phenomenon occurs occasionally but is not a regular occurrence."

CASPI, the all-share price index of the CSE, plunged by 21 points to settle at 15,066 and the general index CSCX lost 12 points to 9,074.

Turnover on DSE rises too

Meanwhile, the Dhaka Stock Exchange (DSE) also saw a slight increase in turnover value, reaching Tk713 crore, mainly driven by block transactions.

The block market, where buyers and sellers predetermine transactions, saw 3.10 crore shares of 156 firms traded for Tk296.78 crore. 

Large-cap stocks such as Meghna Petroleum, Jamuna Oil, and Unilever Consumer Care primarily dominated the block market's turnover.

A managing director of a renowned brokerage firm said on seeking anonymity that capital gains will be taxed at the rate of 15% from the financial year 2024-25, which was finalised in the parliament session on Saturday. Several large investors took capital gains through block trades yesterday, the last working day of FY24.

Meanwhile, the equity indices of both stock exchanges plummeted as investor sentiment took another hit following the introduction of capital gains taxes on secondary market investments.

DSEX, the benchmark index of the Dhaka bourse, lost 27 points and blue-chip DS30 dropped 12 points to close at 5,328 and 1,909 respectively.

During the session, only 92 scrips advanced, while 268 declined and 38 remained unchanged.

The EBL Securities in its daily market commentary said the premier bourse of the country retraced to correction mode again as investor sentiment observed another blow following the imposition of capital gain taxes on secondary market investments in the coming fiscal year, impeding the market's recovery from its prolonged depressed state.

The market opened lower, with sellers being predominant across the trading floor as investor sentiment has been triggered again after the government imposed a 15% tax on capital gains exceeding Tk50 lakh in the Finance Bill 2024, it added.

Cautious investors preferred to remain watchful and monitor the market momentum owing to prevailing uncertainties and opted to secure their recent gains from the market, it noted.

Combining the Finance Act 2024 and the Income Tax Act 2023, Chartered Accountant Snehasish Barua, a director at SMAC Advisory Services Ltd, said on Saturday, capital gains from assets held for more than 5 years is 15% for individuals and that from the assets held for a shorter period is subject to their regular income tax. 

If a rich individual, who earns income from capital market only realises capital gains of over Tk68.5 lakh in the 2023-24 income year, will be taxed at a 25% rate and if his net worth exceeds Tk50 crore it will become 33.75% including the 35% surcharge, he added.  

"Next year, the highest surcharge-included rate may hit an extreme high of 40.5% for him if he realises capital gains over Tk88.5 lakh," Snehasish said.

Sponsors, directors and placement shareholders of listed shares and funds will have to pay 10% source tax on their capital gains during selling and later their regular capital gain tax will be collected during tax return filing, said Md Abdul Kader Nabil, a brokerage professional and also an income tax practitioner.