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Bulls returned to the Pakistan Stock Exchange (PSX) on Thursday — a day after the government proposed its budget for FY2024-25 — as shares went up by more than 1,700 points in intraday trade.
The KSE-100 index went up by 1707.83, or 2.35 per cent to stand at 74,505.26
points from the previous close of 72,797.43 at 10:49am.
Mohammed Sohail, chief executive of Topline Securities, attributed the upward trajectory to “no increase in tax on dividend and capital gain [tax] (CGT) for investors in the new budget”.
Raza Jafri, chief executive of EFG Hermes Pakistan, said, “The market is clearly reacting positively to the soft changes to CGT for tax filers, in sharp contrast to the fears in the run-up to the budget.”
“The measures to go after non-tax filers, and to an extent, retailers and real estate, are also being taken positively although risks remain on enforceability,” he added.
On the International Monetary Fund’s (IMF) expected reaction to the budget, which was aimed at securing a new bailout, Jafri said it should be “acceptable” to the global lender in its current form.
“The government now needs to hold its nerve and push through with implementation and enforcement,” he stressed.
“Market remained under pressure for the past couple of days for reasons including uncertainties over significant tax measures in the budget amid guidelines from the IMF,” Shahab Farooq, director of research at Next Capital Limited, said.
“On the contrary, the actual budget put those concerns to rest with overall positive impacts of budgetary measures.”
Farooq also expressed confidence that the IMF was “likely to give its consent on the budget, particularly [the] move to enhance documentation of economy by tightening the belt around non-filers and real estate sector”.
He noted that the “outlook for equities market, which was already cheap, has further improved”.
More to follow