KARACHI: The US dollar strengthened by around one rupee during past three trading sessions owing to fall in remittances and rise in demand for import payments, dealers said on Wednesday.
The Pak Rupee fell by 50 paisas to close at Rs160.95 to the dollar from previous day’s closing of Rs160.45 in interbank foreign exchange market.
The rupee closed at Rs159.96 to the dollar on Friday May 08, 2020.
They said that the after the ease in lockdown from May 10, 2020 the demand of consumer goods increased substantially, which also encouraged the importers to place new foreign orders.
Overseas Pakistani workers sent home $1.790 billion in April, compared with $1.894 billion in previous month.
Pakistan received $18.781 billion in remittances in July-April FY2020, compared with $17.801 billion in the same period last year.
KARACHI: Analysts believe that the State Bank of Pakistan (SBP) likely to further ease the key policy rate by 100 basis points in the upcoming announcement scheduled for May 15, 2020.
Analysts Arif Habib Limited said that the monetary policy committee of SBP will convene on Friday (15th May 2020) to announce the monetary policy for the next two months.
“We expect the SBP to cut policy rates by 100 bps to 8.00 percent in the upcoming monetary policy statement,” the analysts said.
The said that the SBP may reduce the policy rate due to the following reasons:
i) Inflation is likely to continue its downward trend due to massive decline in prices of petroleum products (MoGas and HSD prices reduced by Rs15/liter and Rs27/liter) along with lower demand of perishable items which may reduce inflationary pressure; and
ii) Recent change in macros given outbreak of the Novel Coronavirus which may further induce the SBP to stimulate the economy by reducing policy rate further.
Moreover, it seems the fixed income market has already incorporated rate cut as treasury bills of 3-, 6- and 12-month are trading at 8.39 percent, 8.00 percent and 7.75 percent which are lower than current policy rate of 9.00 percent.
To recall, Monetary Policy Committee (MPC) convened emergency meeting on April 16, 2020 where the SBP announced a further cut in the policy rate by 200 basis points which is in addition to the 225 basis points cut announced in March, taking the policy rate to a single-digit of 9 percent.
The MPC opted rate cut stance on account of i) to cushion the economic fallout (slowdown in growth and employment) amid Coronavirus, ii) worsening outlook for global and domestic economic activity in the wake of the Coronavirus Pandemic, and iii) SBP forecasting inflation to come down to single digits between 7-9 percent in the next fiscal year.
KARACHI: Automobile manufacturers have witnessed worst-ever month as not a single car was sold during April 2020 owing to lockdown imposed by the federal and provincial governments to prevent coronavirus pandemic.
The lockdowns due to COVID-19 imposed by the Federal and Provincial governments in the later half of Mar-2020 till date has resulted in no car sales during Apr-2020, as reported by Pakistan Automobile Manufacturers Association (PAMA).
The lockdowns has resulted in closure of plant operations along with car dealerships across the country.
As a result, in 10MFY20 car sales have declined by 52 percent YoY.
Honda Car (HCAR) sales are down by 64 percent YoY, followed by Indus Motors (INDU) and Pak Suzuki Motor Company (PSMC) with declines of 54 percent YoY and 47 percent YoY, respectively.
ATLH (motorbikes) too recorded nominal sales of 2,783 units compared to pre-COVID sales of around 100k units.
Keeping in view the importance of the Wheat harvesting season, the governments allowed the tractor industry to resume their operations in mid-April-2020.
The tractor sales during Mar-2020 recorded a decline of 63 percent YoY and 30 percent MoM.
Al Ghazi Tractors (AGTL) reported an increase of 19 percent MoM in its sales, while Millat Tractors (MTL) sales declined by 51 percent MoM. Last month, MTL sales were up MoM (+2 percent) whereas AGTL recorded a MoM decline (-22 percent MoM).
KARACHI: The equity market recorded increase of 319 points on Tuesday on expectation of cut in policy rate to be announced this week.
The Index closed at 33,603 points as against 33,284 points showing an increase of 319 points.
Analysts at Arif Habib Limited said that the market went positive on the prospect of rate cut for which the State Bank of Pakistan (SBP) will be taking decision by end of week, besides the government’s stance on construction of Dams that is likely to generate demand for Cement and Steel.
Resultantly, Cement and Steel sectors ruled the index, mostly trading near upper circuits and generating high trading volumes. Banking and Oil & Gas sector stocks couldn’t generate much interest amongst investors.
Cement sector topped the index with 75.8 million shares, followed by Technology (28.6 million) and Vanaspati (23.1 million). Among scrips, MLCF realized trading volumes of 28.4 million shares, followed by UNITY (23.1 million) and FCCL (19.1 million).
Sectors contributing to the performance include Cement (+150 points), Banks (+67 points), Fertilizer (+62 points), E&P (+28 points), Power (+24 points) and O&GMCs (-16 points).
Volumes increased further from 198.2 million shares to 224.5 million shares (+13 percent DoD). Average traded value also increased by 68 percent to reach US$ 45.9 million as against US$ 27.4 million.
Stocks that contributed significantly to the volumes include MLCF, UNITY, FCCL, WTL and HASCOL, which formed 42 percent of total volumes.
Stocks that contributed positively to the index include LUCK (+50 points), ENGRO (+31 points), HBL (+29 points), MCB (+28 points) and DGKC (+26 points).
Stocks that contributed negatively include SNGP (-20 points), BAHL (-9 points), PMPK (-8 points), DAWH (-7 points), and AICL (-6 points).
KARACHI: The Pak Rupee fell by 38 paisas against dollar on Tuesday owing to reports the government is going to hedge oil.
The rupee ended Rs160.46 to the dollar from previous day’s closing of Rs160.08 in interbank foreign exchange market.
Currency experts said that the rupee was witnessing deterioration in its values against dollar as the government was mulling to hedge oil to get benefit of lower prices in international market.
The experts said that the lower import bill however support the local currency to gain values.
The trade deficit shrank by 25.68 percent to $19.49 billion during July – April 2019/2020 as compared with the deficit of $26.23 billion in the same period of the last fiscal year.
The exports in first ten months (July – April) 2019/2020 also fell by four percent to $18.41 billion as compared with $19.16 billion in the corresponding period of the last fiscal year.
KARACHI: State Bank of Pakistan (SBP) relaxes refinance scheme to prevent large scale layoff of workers due to adverse effects on the economy due to coronavirus.
KARACHI: The stock market gained 16 points on Monday while trading in narrow range.
The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 33,284 points as against 33,268 points showing an increase of 16 points.
Market traded in a narrow range between +48 points and -142 points, closing the session +16 points. Banking sector traded in the negative zone, and similar activity was observed in Cement and E&P.
All eyes are set on MSCI rebalancing and Monetary Policy rate cut, of which MSCI is scheduled to announce decision on May 12, whereas SBP is also expected to take the decision on Policy rate during the ongoing week. Side board scrips came in the limelight today and contributed to the volumes, including WTL, HUMNL, UNITY and TRG.
Pharma stocks, FEROZ and SEARL also reacted to possible non-exclusive engagement with Gilead for manufacturing Coronavirus drug Remdesivir and performed well on the bourse.
Technology stocks contributed 94.2 million shares to the index, followed by O&GMCs (16.5 million) and Vanaspati (15.1 million). Among scrips, WTL topped with 62.4 million shares, followed by TRG (15.8 million) and UNITY (15.1 million).
Sectors contributing to the performance include Pharma (+23 points), Technology (+12 points), Insurance (+8 points), Power (-10 points) and E&P (-10 points).
Volumes increased from 88 million shares to 198.2 million shares (+125 percent DoD). Average traded value also increased by 15 percent to reach US$ 27.4 million as against US$ 23.9 million.
Stocks that contributed significantly to the volumes include WTL, TRG, UNITY, HASCOL and HUMNL, which formed 56 percent of total volumes.
Stocks that contributed positively to the index include SEARL (+12 points), SNGP (+10 points), TRG (+7 points), AICL (+6 points) and GLAXO (+6 points). Stocks that contributed negatively include HUBC (-12 points), PPL (-7 points), HBL (-4 points), PSO (-4 points), and OGDC (-4 points).
KARACHI: The Pak Rupee fell by 10 paisas against dollar Monday amid higher demand import payment, dealers said.
The rupee ended Rs160.07 to the dollar from last Friday’s closing of Rs159.97 in interbank foreign exchange market.
Currency analysts said that the market opened after weekly holiday which increased the demand for import payment.
They said that the rupee also improved with shrinking trade deficit.
The trade deficit shrank by 25.68 percent to $19.49 billion during July – April 2019/2020 as compared with the deficit of $26.23 billion in the same period of the last fiscal year.
The exports in first ten months (July – April) 2019/2020 also fell by four percent to $18.41 billion as compared with $19.16 billion in the corresponding period of the last fiscal year.
KARACHI: Federal Board of Revenue (FBR) has been proposed to rationalize of withholding tax on dividends as higher rate from equity investments discourage investment in the capital market.
Pakistan Stock Exchange (PSX) in its proposals for budget 2020/2021 submitted to Federal Board of Revenue (FBR) said that withholding tax on profit from debt instruments is currently charged a lower rate compared to the withholding tax charged on dividend from equity investments.
The difference ranges between 2.5 percent – 5 percent. This reduces the incentive to invest in the equity market.
Tax treatment on various asset classes should not be the primary driver of investment decisions, the PSX said, adding that the profit on debt and dividends should receive the same tax treatment.
At present, it is observed that corporate profits are first taxed at company level, and subsequently, the resulting profits which are distributed as dividends are taxed at the individual level.
This is essentially a form of double taxation, and result in the misallocation of capital in an economy by giving an upper hand to fixed income investments.
To remove this discrepancy, the government should introduce a mechanism to eliminate the distortion on the tax charged on dividends, and make the effective tax rate equal to that on debt.
Tax rate on investments
Profit paid is more than rupees five hundred thousand
Profit paid is rupees five hundred thousand or less
Profit on Debt u/s 151
15 percent
10 percent
Sukuk-holder (individual or an association of person), if the return on investment is more than one million U/S 150A
12.5 percent
Sukuk-holder (individual and an association of person), if the return on investment is less than one million U/S 150A
10 percent
Dividend U/S 150 & 236S
15 percent
The PSX submitted following proposals:
i. Government should introduce a mechanism to remove the double taxation of company’s profits – once in the hands of the company, and once in the hands of shareholders as dividends – such that the effective tax rate on dividends is on par with profit on debt.
ii. Rationalize the current tax rate on dividends to make it equal to the tax rate on profit from debt.
Provided that there should be no withholding tax on dividend up to Rs100,000 per annum.
Giving rationale to the proposals, the PSX said that a similar tax treatment on dividend from equity investment and debt instrument will provide a level playing field to equities and attract higher inflows in the stock market. Further, it would lead to increase in numbers of UINs.
The PSX proposed following proviso should be inserted in section 150 and Section 236S to the Income Tax Ordinance, 2001:
“Provided that there should be no withholding of tax where amount does not exceed Rs100,000 per annum.”
Clause (b) Division-I, Part III, First Schedule to the Income Tax Ordinance, 2001, for the word ’15 percent’ shall be substituted by ’10 percent.’
KARACHI: Pakistan Stock Exchange (PSX) has proposed to reduce the rate of withholding tax in the gross income earned on margin financing transactions to 2.5 percent from existing 10 percent.
