The capital market skilled continued bearish development on Thursday, weighed down by considerations over political instability, coverage uncertainty, and structural challenges.
The market noticed modest features early within the session, however the lack of sustained shopping for stress, coupled with bearish drivers, saved buyers cautious.
The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index touched an intraday low of 112,778.55, a drop of 1,369.9 factors, or -1.2%, from the earlier session’s shut of 114,148.45.
“Pressure was witnessed on the PSX amid considerations over a bar on non-filing buyers underneath new tax amendments,” stated Ahsan Mehanti, Managing Director and CEO of Arif Habib Commodities.
He added, “Political uncertainty, considerations over cautious SBP coverage easing, and uncertainty over the result of slippages on IMF tax assortment and structural reform targets performed a catalyst function in bearish exercise.”
The lately launched Tax Law (Amendment) Act, 2024, which bars non-filers from opening accounts within the inventory market, has drawn sharp criticism from stakeholders. The Pakistan Stock Brokers Association (PSBA) has raised severe considerations, calling for pressing dialogue with authorities officers.
The contentious modification stipulates: “any individual authorised to promote securities, together with debt securities or models of mutual funds, shall not promote, open an account or clear the sale of securities or mutual funds to an ineligible particular person or affiliation of individuals.”
This rule immediately impacts non-filers, a lot of whom symbolize a good portion of energetic merchants inside the inventory market. The PSBA warned that the transfer might considerably scale back participation within the inventory market and dampen investor sentiment.
Adding to fiscal challenges, final month, Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial disclosed that the nation’s tax hole stood at Rs7.1 trillion, with the earnings tax hole alone accounting for Rs2.4 trillion. The revelation underscores Pakistan’s problem in assembly tax assortment targets tied to the IMF programme.
The market’s volatility was exacerbated by profit-taking from main institutional buyers corresponding to insurance coverage firms and banks, which was not met with satisfactory recent shopping for by mutual funds.
“In current periods, we now have seen profit-taking by main institutional buyers, corresponding to insurance coverage firms and banks, with out satisfactory recent shopping for by mutual funds,” stated Muhammad Saad Ali, Director of Research at Intermarket Securities Ltd.
“The market lacks new optimistic triggers in the intervening time, after a robust run-up, and there are rising considerations round politics. I believe the identical theme is enjoying out immediately.”
Prime Minister Shehbaz Sharif, throughout his go to to Karachi on Wednesday, sought to revive optimism, reiterating his perception within the economic system’s path to restoration. Speaking on the Pakistan Stock Exchange, the premier acknowledged that present taxation charges have been hindering enterprise and funding actions.
However, he emphasised the significance of honouring commitments made underneath the IMF programme, recognising its function in guaranteeing financial stability.
Adding to this narrative, Deputy Prime Minister Ishaq Dar highlighted the long-term advantages of inventory market integration, asserting that it had developed into a sturdy basis for the economic system.
Finance Minister Muhammad Aurangzeb additionally underscored the important function of the inventory market in boosting investor confidence and driving financial progress.
Exacerbating the financial pressure, the diversion of re-gasified liquefied pure fuel (RLNG) to the home sector surged to 450mmcfd in January 2025, up from 250mmcfd in December 2024. This improve, underneath Sui Northern Gas Pipelines Limited’s jurisdiction, is predicted to worsen the round debt within the fuel sector.
The differential between the home tariff of Rs1,250 per MMBTU and the RLNG tariff of Rs3,600 per MMBTU is including substantial monetary pressure to fuel utilities, elevating considerations in regards to the sector’s sustainability.
The IMF’s proposed levy on fuel provides to industrial captive energy vegetation (CPPs) stays a important structural benchmark underneath the Extended Fund Facility (EFF), additional including to investor anxieties over compliance and monetary pressure.
On the fiscal entrance, the federal government raised Rs434 billion by means of the public sale of Market Treasury Bills on Wednesday, surpassing the goal of Rs250 billion however falling wanting the Rs654 billion maturity quantity.
Declining cut-off yields for three-month, six-month, and 12-month papers—by 22bps, 21bps, and 50bps, respectively—point out market anticipation of additional financial easing by the State Bank of Pakistan (SBP).
Expectations of a fee minimize have been bolstered by declining inflation, which eased to 4.1% year-on-year in December from 4.9% in November.
This development, pushed by a secure forex, decrease international commodity costs, and improved provide chain situations, has offered some optimism for policymakers and buyers alike.
The KSE-100 Index closed at 116,052.68 on Wednesday, marking a lack of 202.44 factors, or -0.17%, as profit-taking and ongoing considerations in regards to the vitality sector’s round debt saved the market within the purple for the third consecutive day.
