Textile stocks shake off gloom after GSP cuts

The suspension of the generalised system of preferences has hardly affected textile stocks as the sector yesterday was the highest gainer with a 6.86 percent rise.
Textiles generated the highest gain as investors are not worried about GSP suspension, said Md Moniruzzaman, managing director of IDLC Investments.
Investors were at first spooked by the suspension of the duty-waiver by the United States, but they later realised that it was an opportunity for Bangladesh to develop its working environment and worker rights, he said.
The European Union's assurance of not revoking its GSP privileges also boosted investors' confidence, Moniruzzaman added.
“A decision to withdraw the EU GSP for Bangladesh must be avoided, as it would have far-reaching consequences for jobs and the economy,” the EU said in a statement on Sunday.
Textiles gained as investors shrugged off the negativity from the duty waiver cuts by the US, LankaBangla Securities said in its daily market analysis.
“The GSP suspension has no negative impact on listed textile stocks in the stockmarket,” said Maruf Matin, managing director of Alliance Capital Asset Management Company.
Investors are considering this move as an opportunity for Bangladesh to become the largest apparel exporter in the world, Matin said.
“They believe the textile stocks will generate good returns in the days to come.”
The Obama administration suspended trade privileges for Bangladesh on Thursday due to insufficient progress in labour rights and workplace standards.
Although the suspension will transmit a cautionary signal to other major apparel buyers, it will make those companies concentrate more on improving the quality of the workplace, said Md Ashaduzaman Riadh, research in change of LankaBangla Securities.
Share prices on the Dhaka Stock Exchange yesterday started the new fiscal year with a gain, rising 2.91 percent, powered by investors' buying spree.
“The market activities exhibited strong investor optimism,” LankaBangla said.
DSEX, the benchmark general index of DSE, closed the day at 4,224.16 points, after edging up 119.52 points.
Turnover, the most important indicator for the market, advanced 34.2 percent to Tk 763 crore, compared to the previous day.
Among the major sectors, engineering gained 5.36 and cement 4.03 percent.
Of the 282 issues that traded on the DSE floor, 256 advanced, 21 declined and five remained unchanged.
An aggregate of 1.47 lakh trades were executed with 13.34 crore shares and mutual fund units changing hands on the Dhaka bourse.

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