Square Pharma shares get buyers at floor price

After more than seven months, Square Pharmaceuticals Ltd shares, on Thursday morning have seen buyers bidding at and above the floor price of Tk209.8 apiece.

It offered a sense of relief to a large number of investors who were unable to sell the blue-chip share for months, stockbrokers said.

However, selling pressure was yet to let the large-cap stocks take off from the floor as of 11:30am.

Securities regulator imposed the floor price on individual scrips on 28 July last year and that deprived investors of majority scrips of opportunities to exit.

In the last few months over a hundred of 401 DSE scrips came up from the floor, mostly small cap ones.

Square Pharmaceuticals posted Tk16.82 in earnings per share for the first nine months of the last fiscal year, up from Tk16.3 for the same period of the previous year.

Source: The Business Standard

The ‘Z’ chaos in the stock market

BSEC in November 2020 prohibited stocks category downgrading and the order to the bourses was never repealed. Now it asks DSE to explain why some sick companies were not placed in the “Z” category

Infographic: TBS

Infographic: The Business Standard

Bourses and stock investors, over the last two weeks, have seemed too puzzled to conclude when a listed company should be punished as a so-called “Z” category stock and when it should not be.

They were finding too many deviations between the regulations and the ongoing practices.

At least 23 of the listed firms were clearly deserving of being downgraded to “Z” much earlier last fiscal year, according to the 1 September 2020 notification by the Bangladesh Securities and Exchange Commission (BSEC) that relaxed the criteria for the companies to be placed in the “Z” category.

Surprisingly, each was still trading as superior “A” or “B” category-company shares until the puzzled bourses, responding to some criticism, downgraded five of them on 25 June, creating another sudden shock for the investors as downgrading to “Z” means inconveniences in secondary market trading and a price fall.

On the following day, the BSEC asked the Dhaka Stock Exchange to explain why each of the 23 companies was not regularly reviewed and placed in the “Z” category.

“We have already replied to the regulator’s letter,” said M Shaifur Rahman Mazumdar, acting managing director at DSE.

Following the 2020 regulations change, there had been some confusion regarding downgrading listed companies to “Z” and the DSE had been seeking BSEC approval for downgrading companies to “Z” in eligible cases, he said, declining requests for further details.

TBS, however, saw an unpublished BSEC letter written to both the bourses of Dhaka and Chattogram in November 2020 that prohibited category downgrading, and the order was never repealed later.

This was the key to all the false appearances of sick companies’ categories on the bourses, said officials at the stock exchanges, seeking anonymity.

“The BSEC order barred us from downgrading companies, and now we have to show cause,” said one of them.

The relaxations of 2020 were for the greater interest of the capital market, listed firms, and their investors amid an unusual situation during the pandemic, and they were mainly exempting firms’ accidental tough times in paying dividends, not every single non-compliance, said BSEC Executive Director and Spokesperson Rezaul Karim.

“Seeking explanation is part of the regulator’s daily job, and if the explanations are satisfactory, there should emerge solutions to exceptional problems,” he added.

BSEC also asked both the DSE and the Chittagong Stock Exchange (DSE) on Wednesday to explain why they did not monitor, act on, and report on the Z-category companies.

Since the November letter, no company went to the Z category until 25 June, said DSE-CSE officials.

“What should we report when no company entered into Z?” said one of them.

Listed companies that fail to stay in operations, hold an annual general meeting, or pay dividends within stipulated time used to be categorized as “Z” by the bourses, eying a comparative inconvenience in trading of their shares through allowing no leveraged trading and a longer settlement cycle and, of course, a weaker image among investors.

BSEC, in a September 2021 notification prior to the November, 2020 letter to the bourses, said no cash dividend, negative operating cash flow for two straight years, negative net asset value, no AGM in six months of the fiscal year ending despite no legal complexity, no operations for more than six months despite no factory modernization project could result in downgrading to “Z” with the regulator’s prior approval.

Source: The Business Standard


An IPO slowdown

Only one firm from the manufacturing sector go public in FY23

It appears that private sector firms are becoming increasingly reluctant to go public nowadays, unless there is a regulatory obligation.

In fiscal 2022-23, only one manufacturer, Navana Pharmaceuticals Limited, was listed on the country’s stock market, down from three in the previous fiscal year.

In the outgoing fiscal year, five out of the six new firms listed on the stock exchanges were either banks or insurance companies, as they were compelled to go public due to regulations.

The IPO of Asiatic Laboratories, another manufacturing company, in the last fiscal year was halted in the middle due to its accounting irregularities.

According to DSE data, in FY21, manufacturing sector firms were highly dominant in IPOs to raise funds from the stock market to expand their businesses.

Out of the total 16 firms listed in FY21, 11 were from the manufacturing sector, while the remaining were banks and insurance companies.

Collectively, the companies raised a total of Tk1,610 crore, with the manufacturing firms accounting for Tk1,413 crore of that amount.

Following the onset of Covid, capital raising by manufacturing firms plummeted due to a slowdown in business.

Later, the Russia-Ukraine war exacerbated the situation as the cost of raw materials sharply soared in global markets.

Market insiders said, amid the ongoing economic uncertainty, entrepreneurs in the manufacturing sector are being highly conservative when it comes to investing for business expansion.

 The country’s manufacturing sector faced a significant blow as a result of the Covid-19 pandemic and the Russia-Ukraine war. In this situation, market insiders have noted that manufacturers are reluctant to go public.

The Bangladesh Securities and Exchange Commission (BSEC) has adopted a somewhat slow policy in approving IPOs due to the fund crisis and poor condition in the capital market.

Due to which fewer IPOs were approved in the outgoing fiscal year compared to previous years.

Rezaul Karim, a spokesman for the BSEC, told The Business Standard, “IPOs are approved after scrutiny.”

“Some companies have not fared well after Covid, which has resulted in their inability to apply for public listing as they fail to meet the eligibility criteria outlined in the Public Issue Rules,” he added.

Rezaul Karim, also the executive director of the commission, believes that a larger number of IPOs will come from the manufacturing sector in the future.

Md Obaydur Rahman, director of AAA Finance & Investment, told TBS, “The manufacturing sector has taken a big hit after Covid. Many companies have had a major impact on their profits. Some institutions are struggling to stay afloat.”

“They are in crisis again due to the Russia-Ukraine war, even before the recovery from the Covid shock. Public Issue Rules have not been relaxed despite reduced predictability due to Covid and the war. In this situation, entrepreneurs are not interested in raising capital from the stock market for business expansion,” he added.

Md Obaydur Rahman also shares the belief that many good companies are hesitant to go public due to the fear of not receiving a fair value through the formula used to determine the share price in the book building method.

He said that although some companies have good business and profits, many are reluctant to go public due to concerns about not obtaining a favourable share price through the bookbuilding method.

IPOs and fund raising falls

According to data from the Dhaka Stock Exchange (DSE), fundraising from the stock market declined in FY23 to Tk621 crore from Tk699.36 crore in the previous fiscal year.

Also, the number of IPOs has dropped in the outgoing fiscal year.

In FY23, out of the six companies that went public, only one used the book-building method to raise funds, while the remaining five opted for the fixed price method.

Only Navana Pharmaceuticals raised Tk75 crore for business expansion, while the remaining five companies, consisting of three insurers and two banks, raised Tk546 crore in order to fulfil the regulatory obligation of going public.

The banks and insurers are expected to utilise the funds raised for investing in the capital market and government treasury bonds.

In fiscal 2021-22, a total of eight firms raised funds from the stock market, while two banks and three insurers raised Tk579 crore and three manufacturing firms raised Tk120 crore for the business expansion and loan repayment.

Basically, private sector entrepreneurs raised funds for long-term financing and invested in business expansion.

Global Islami Bank raised Tk425 crore, of which Tk100 crore was allotted for SME investment, Tk268 crore for buying T-bonds, and Tk50 crore for buying listed securities.

Midland Bank raised Tk70 crore, of which Tk61.11 crore was allotted for investing in T-bonds and Tk5 crore in listed securities.

Navana Pharmaceuticals raised Tk75 crore, of which Tk23.24 crore was for the construction of a new general building, Tk9 crore was for the construction of a new utility and engineering building, and Tk21 crore was for loan repayment.

Chartered Life Insurance raised Tk15 crore from the stock market; as per the prospectus, the insurer will invest Tk6 crore in government treasury bonds and Tk7.9 crore in the secondary market.

Islami Commercial Insurance Company raised Tk20.26 crore, and Trust Islami Life Insurance raised Tk16 crore.

Source: The Business Standard

মিউচুয়াল ফান্ডের সব ধরনের আয় করমুক্ত

শেয়ারবাজারে অনুমোদিত মিউচুয়াল ফান্ড, এক্সচেঞ্জ ট্রেডেড ফান্ডসহ চার ধরনের তহবিলের যেকোনো ধরনের আয় করমুক্ত থাকবে। নতুন আয়কর আইনে এ বিধান যুক্ত করা হয়েছে। মিউচুয়াল ফান্ড ও এক্সচেঞ্জ ট্রেডেড ফান্ড ছাড়াও বিকল্প বিনিয়োগ তহবিল ও রিয়েল এস্টেট ইনভেস্টমেন্ট ট্রাস্টের যেকোনো ধরনের আয় এ সুবিধা পাবে।

মিউচুয়াল ফান্ড পরিচালনার সঙ্গে যুক্ত একাধিক সম্পদ ব্যবস্থাপক প্রতিষ্ঠানের শীর্ষ নির্বাহী প্রথম আলোকে বলেন, দীর্ঘদিন ধরে মিউচুয়াল ফান্ডের যেকোনো ধরনের আয় করমুক্ত সুবিধা পেয়ে আসছিল।

কিন্তু গত বছর জাতীয় রাজস্ব বোর্ডের (এনবিআর) জারি করা নির্দেশনার কারণে তালিকাভুক্ত কিছু কোম্পানি মিউচুয়াল ফান্ডের প্রাপ্য লভ্যাংশ বিতরণের সময় কর কেটে রাখছিল। এতে এ নিয়ে বিভ্রান্তি দেখা দেয়। নতুন আয়কর আইনে বিষয়টি অন্তর্ভুক্ত করার ফলে এ নিয়ে বিভ্রান্তির অবসান হবে।

এ বিষয়ে ভিআইপিবি অ্যাসেট ম্যানেজমেন্টের প্রধান নির্বাহী কর্মকর্তা শহীদুল ইসলাম প্রথম আলোকে বলেন, নতুন এ সিদ্ধান্তের ফলে এখন থেকে কোনো মিউচুয়াল ফান্ড তালিকাভুক্ত কোনো কোম্পানিতে বিনিয়োগ করে যে লভ্যাংশ পাবে, সে ক্ষেত্রে লভ্যাংশ বিতরণকারী কোম্পানি কোনো কর কেটে রাখতে পারবে না। এর ফলে মিউচুয়াল ফান্ডের আয় বাড়বে। তবে মিউচুয়াল ফান্ডগুলো যখন বিনিয়োগকারীদের লভ্যাংশ বিতরণ করবে, তখন ব্যক্তিশ্রেণির বিনিয়োগকারীদের ক্ষেত্রে ১০ শতাংশ ও কোম্পানি বিনিয়োগকারীর ক্ষেত্রে ২০ শতাংশ কর কেটে রাখবে।

শেয়ারবাজারের মিউচুয়াল ফান্ডের আয়ের কয়েকটি খাত রয়েছে। সেগুলোর মধ্যে উল্লেখযোগ্য হলো ব্যাংকে টাকা রেখে সুদ আয়, তালিকাভুক্ত কোম্পানিতে বিনিয়োগের বিপরীতে লভ্যাংশ আয়, বন্ডে বিনিয়োগের বিপরীতে কুপন বা সুদ আয়। আর তালিকাভুক্ত কোম্পানির শেয়ারে বিনিয়োগ করে মূলধনি আয় বা ক্যাপিটাল গেইন। এখন থেকে এসব আয় পুরোপুরি করমুক্ত থাকবে বলে নতুন আয়কর আইনে বলা হয়েছে।

বাজার পরিস্থিতি

মিউচুয়াল ফান্ডের যেকোনো ধরনের আয়কে করমুক্ত রাখা হলেও বাজারে তালিকাভুক্ত মিউচুয়াল ফান্ডের ক্ষেত্রে তার কোনো প্রভাব দেখা যায়নি গতকালের বাজারে। এদিন লেনদেন হওয়া বেশির ভাগ মিউচুয়াল ফান্ডের ইউনিটের দাম অপরিবর্তিত ছিল। কারণ, এসব ফান্ডের ইউনিটের দাম পুঁজিবাজার নিয়ন্ত্রক বিএসইসির বেঁধে দেওয়া সর্বনিম্ন মূল্যস্তর বা ফ্লোর প্রাইসে আটকে আছে।

ঢাকার বাজারে গতকাল রোববার লেনদেন হওয়া ৩৫৪ প্রতিষ্ঠানের মধ্যে ১৭৬টিরই দাম অপরিবর্তিত ছিল। দাম বেড়েছে মাত্র ৬৪টির আর কমেছে ১১৪টির। এর ফলে এদিন বাজারের সূচক ও লেনদেনও কমেছে। দেশের প্রধান শেয়ারবাজার ঢাকা স্টক এক্সচেঞ্জের(ডিএসই) প্রধান সূচক ডিএসইএক্স ১১ পয়েন্ট কমে দাঁড়িয়েছে ৬ হাজার ৩৪২ পয়েন্টে। দিন শেষে ঢাকার বাজারে লেনদেনের পরিমাণ ছিল ১ হাজার ৩১ কোটি টাকা, যা আগের দিনের চেয়ে ৩৩ কোটি টাকা কম।

সূত্রঃ প্রথম আলো


Next fiscal year to see higher allocation for gross subsidy

Bangladesh national budget allocation 2023-24

Infographic: TBS

Despite increasing the prices of fertilisers, electricity and gas, the next fiscal year (FY2023-24) will see an additional allocation for gross subsidies to adjust to the amount required in excess of the allocation for the current fiscal year.

However, the net subsidy will be less in the next fiscal year, finance officials have said.

In the current fiscal year’s budget, the government allocated Tk81,490 crore for subsidies, stimuluses and cash loans. In the budget of the next fiscal year, the total allocation for these sectors may be increased to Tk1,05,000 crore. While the amount of net subsidy in the new fiscal year has not increased, additional allocation is being kept mainly to meet the subsidy arrears of the current fiscal year.

The visiting IMF team, reviewing the implementation of the loan conditions, has accepted this move of the ministry of finance to adjust the subsidy spending.

An official of the Finance Division told The Business Standard that the IMF mission raised questions about increasing the subsidy allocation in the next fiscal year’s budget.

“We have informed them that the amount of net subsidy will be much less in the next fiscal year compared to this year. However, the amount of money that needs to be allocated to handle the subsidy pressure this year, could not be allocated. As a result, there are arrears in various sectors, which will be met by allocations in the budget of the next fiscal year,” said the official.

As per IMF loan conditions, the current fiscal year allocation for agriculture, food and export subsidies, social security, pension and gratuities is Tk1,82,600 crore. In the budget of the next fiscal year, the allocation will be Tk1,82,300 crores.

But in the next fiscal year’s budget, apart from subsidies, export incentives, allocation for pensions, interest on savings certificates and social security will be around Tk2,30,000 crore.

Finance Division officials said that in the budget of the current fiscal year, the allocation for subsidy in the power sector was Tk17,000 crore. Electricity prices have been hiked three times after the power department demanded an additional subsidy of Tk32,500 crore.

This has saved the government Tk9,200 crore. On the other hand, the revised budget increased the allocation for subsidy to the power sector to Tk23,000 crore.

Which means, the power sector needed a total subsidy of Tk49,500 crore this year and the power sector is getting Tk31,200 crore after price increase while the additional subsidy remains due.

After increasing the price three times this time, the price of electricity will increase again by next June. This will reduce the net subsidy demand next year. But due to the arrears of this year’s subsidy, around Tk25,000 crore is being kept in the new budget to pay it.

Same is the case with fertilisers. In the budget for the last fiscal year, there was an allocation of Tk9,100 crore for subsidies in agriculture. But the increase in fertiliser prices required a subsidy of Tk28,000 crore in the last fiscal. In last year’s revised budget, Tk15,173 crore has been allocated for the subsidy on agriculture. As a result, last year’s agricultural subsidy was also deficient.

Tk16,000 crores have been allocated for agriculture for this year. But the agriculture ministry sought an additional subsidy of Tk40,247 crore. That is, in total, Tk56,247 crore rupees are needed to meet the subsidy in the agricultural sector this year. But in the revised budget, the allocation was increased to Tk26,000 crores. As a result, a large part of this year’s agricultural subsidy remains arrears.

The government has already decided to increase the price of all types of fertilisers by Tk5 per kg saving Tk7,000 crore. As a result, the demand for subsidies will decrease in the new fiscal year. But to meet the arrears, the amount of agricultural subsidy may be increased to about Tk27,000 crore in the next fiscal year.

Finance Division officials said due to the increase in the prices of fuel oil, fertilisers, food products and gas in the international market due to the Ukraine-Russia war, the subsidy demand of various ministries in the current fiscal year is more than double the total allocation. As a result, the ministries have claimed a total subsidy of Tk1,86,595 crore in the current fiscal year.

Finance ministry officials said that despite increasing the allocation in the revised budget, apart from increasing the prices, subsidies of about Tk50,000 crore remain outstanding in various sectors this year, except for fuel oil, which the ministries are unable to pay due to lack of allocation.

Finance Division officials said that in the budget of the current fiscal year, about Tk5,995 crores were allocated for food subsidy and in the revised budget, an additional allocation of Tk812 crores was kept. An allocation of Tk8,000 crore has been estimated for food subsidy in the coming fiscal year.


Floor price to stay until DSEX tops 6,500 points

The securities regulator will not risk lifting the floor price until the main index at the Dhaka Stock Exchange (DSE) goes past 6500 points “in the interest of small investors who are a majority in the stock market”, said the head of the Bangladesh Securities and Exchange Commission (BSEC).

The DSEX rose by 0.16 per cent to settle at 6206.80 points at the end of last Thursday’s trading.

Removal of floor price will lead to price erosion of securities in margin accounts, he said, adding that small investors would then fall victim to margin calls.

In an exclusive interview with the FE, BSEC Chairman Shibli Rubayat Ul Islam said big and institutional investors would take advantage of the price erosion in absence of the floor price while retail investors would endure losses.

“They will face forced selling [of stocks] by lenders,” he added.

Margin accounts have assets purchased with funds belonging to both investors and brokerage firms. So, an investor’s equity is the total value of the securities in the margin account minus the money borrowed from brokerage houses.

As per the rules, a lender shall request his client to provide additional capital or securities if his margin account falls below 150 per cent of the debit balance. The lender shall not permit any new transactions unless the equity is equivalent to at least 150 per cent of the debit balance.

If a margin account falls below 125 per cent of the debit balance, the lender without informing its client can sell assets to meet the margin call.

The index may come down to settle at 6,000 points if the floor price is withdrawn after it reaches 6,500 points, said Mr Islam. “The index is now at 6,200 points. It will fall to 5,500 points if the floor price is withdrawn at this moment.”

The BSEC chairman pointed the finger at institutional investors for the sorry state of the market.

He said that instead of supporting the market now, institutions were waiting to grab the holdings of small investors at lower prices after the removal of floor price.

Mr Islam said investments made by banks have declined to 15 per cent or even lower. For example, Dutch-Bangla Bank now has market exposure at around 4 per cent, he said.

Banks can invest in listed securities up to 25 per cent of their equity on a solo basis and 50 per cent on a consolidated basis, according to the Bank Companies Act. In August 2022, the central bank allowed the banks to calculate their exposure at the purchase price instead of the market price following pleas from a section of stakeholders.

Responding to a query, the BSEC chief said the amount borrowed by small investors in the form of margin loans was greater than that of big investors.

The securities regulator imposed the floor price for the first time in March 2020 to protect the market from going into free fall against the backdrop of the pandemic.

It was then lifted in phases from April 2021.

Later, the price restriction was re-imposed in July 2022 for economic uncertainties ushered in by the Russia-Ukraine war. The restriction was partially removed from 169 stocks in December last year.

On March 1, the regulator reinstated floor price for the 169 securities.

“I am willing to lift floor price at a stage when investors will not be distressed by margin calls,” said the BSEC chief.

The issues surrounding the price restriction will be solved if inactive investors become active, he said, referring to high net-worth and institutional investors. “The floor price will be ineffective if the stock prices go up” due to participation of investors with high investment capacity.

Investors, who can inject fresh funds, should not consider the floor price as a barrier, said the BSEC chairman.

He, however, ruled out that the regulator was fixated on the rise and fall of the index. “But safety of investors is our concern.”

“The Ordinance [Securities and Exchange Ordinance 1969] has mandated us to ensure safety of investors. In no way we can bypass the Ordinance.”

Source: The Finencial Express