Black Money Helps Bulls Go On A Rampage

‘Black money’ helps bulls go on a rampage (thebdpage.blogspot.com) - Bangladesh stocks climbed, with the benchmark index set for its highest close in two months, after the government revived an amnesty offer that allows tax evaders to put their unidentified wealth in equities. Individuals hoarding supposed ‘black money’ can buy stocks with the cash after paying a flat 10 per cent tax as penalty, finance minister Abul Maal Abdul Muhith told lawmakers in capital Dhaka.

The government aims to widen its tariff net as unaccounted money is estimated to account for at least 42 per cent of the nation’s $91 billion economy, he said.

“A kind of enthusiasm has been created among investors by the news,” said Yawer Sayeed, chief executive at Dhaka-based benefit manager AIMS of Bangladesh, which has about 7 billion taka ($94 million) in assets. Yesterday’s rally seems ‘as if the black money has already arrived in the market’.

Stemming slide

The Dhaka Stock Exchange’s General Index rose 1.7 per cent to 6,071.6, headed for its highest close since April 27. The gauge has slumped 27 per cent this year, after soaring 83 per cent in 2010 and 62 per cent in 2009.

About 4.27 billion taka of ‘black money’ flowed into stocks, or 25 per cent of the total volume on the Dhaka Stock Exchange, in the financial year ended June 30, 2010, when the amnesty was introduced, said Sayeed. The proposal may also help the government stem this year’s slide in share prices, said Sayeed.

Trading was halted after a slump on January 10, the biggest in five years, sparked violent clashes between investors and authorities. The benchmark index is on course for its worst annual performance since 1998. Bangladesh, where more than half of the 166 million people don’t have access to electricity, aims to boost economic growth to eight per cent within three years, from 5.8 per cent last year, central bank governor Atiur Rahman said in April. - Bloomberg News

The South Asian nation will increase spending by a record 26 per cent to an unprecedented 1.63 trillion taka, Muhith told

lawmakers.