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Category: Stock & Commodity

  • Share market gains 203 points as energy scrips make recovery

    Share market gains 203 points as energy scrips make recovery

    KARACHI: The share market gained 203 points on Friday owing to recovery in energy scrips after gain in oil prices in international markets.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 34,008 points as against 33,805 points showing an increase of 203 points.

    Analysts at Arif Habib Limited said that the market opened on a positive note today with +89 points and went up by 236 points during the session, closing +203 points at 34,000 level.

    Bounce in international crude prices helped oil and gas stocks to stage some recovery from recent past sessions.

    OGDC and PPL particularly performed well. In the anticipation of rate cut by the Central bank (to be decided today), Cement sector also performed though posted limited gains.

    FEROZ continued ascent on the back of its arrangement with Gilead for manufacturing of Remdesivir, and made consecutive cap for past several sessions.

    Banking sector stocks remained subdued on the prospect of rate cut, however, active buying interest was observed in both BOP and HBL, which have since the beginning of the week performed well.

    Cement sector recorded trading volume of 29.7 million shares, followed by Technology (26.3 million) and O&GMCs (18.8 million). Among scrips, HASCOL led the volumes with 14.8 million shares, followed by KEL (12.2 million) and MLCF (9.9 million).

    Sectors contributing to the performance include E&P (+109 points), Power (+58 points), Cement (+50 points), Food (+31 points), Fertilizer (+20 points) and Banks (-62 points).

    Volumes declined from 240.2 million shares from 213.3 million shares (-11 percent DoD). Average traded value inched up by 1 percent to reach US$ 38.8 million as against US$ 38.5 million.

    Stocks that contributed significantly to the volumes include HASCOL, KEL, MLCF, FFL and FCSC, which formed 25 percent of total volumes.

    Stocks that contributed positively to the index include HUBC (+53 points), NESTLE (+34 points), MARI (+33 points), POL (+29 points) and OGDC (+25 points). Stocks that contributed negatively include BAHL (-22 points), MCB (-21 points), UBL (-19 points), DAWH (-15 points), and PAKT (-12 points).

  • SECP facilitates companies in IAS 39 requirements

    SECP facilitates companies in IAS 39 requirements

    ISLAMABAD: The Securities and Exchange Commission of Pakistan (SEC) has allowed relief registered companies that are applying IAS 39/principles of IAS 39 (for Available for Sale equity instruments).

    The SECP issued S.R.O. 414 (I)/2020 and allowed following relief from the requirements contained in IAS 39 in relation to their Available for Sale (AFS) Equity Investments as follows:

    (a) The company/entity can opt to show impairment loss (if any, due to significant or prolonged decline in fair value of AFS equity investment portfolio), as at March 31, 2020, in the statement of changes in equity.

    (b) If the above short-term relief is opted, the company/entity shall disclose in the notes to the financial statements:

    (i) amount of impairment loss included in the statement of changes in equity under (a) above;

    (ii) amount of profit or loss after tax, arrived at by accounting for the impact of impairment loss in accordance with IAS 39; and

    (iii) Earnings per share based on the (ii) above.

    (c) The dividend income and actual realized gain/loss arising from the de-recognition of AFS equity instruments shall be recognised in the profit and loss account in accordance with the requirements of IAS 39.

    (d) The amount of loss taken to equity as per (a) above, shall be treated as a charge to profit and loss account for the purpose of distribution as dividend, where applicable.

    (e) The amount taken to equity as per (a) above for an AFS equity instrument, adjusted with the fair value change of this AFS equity instrument during the period from April 01, 2020 to June 30, 2020, shall be considered for impairment in accordance with the requirements of IAS 39.

    (f) The impairment loss (if any), as of June 30, 2020, as per (e) above shall be taken to the profit and loss account for the year/period ending June 30, 2020.

    The SECP said that companies/entities willing to follow the full requirements of IAS-39 as applicable are encouraged to do so.

  • Share market gains 112 points in mixed trading

    Share market gains 112 points in mixed trading

    KARACHI: The share market gained 112 points on Thursday in mixed trading during the day.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 33,805 points against 33,693 points showing an increase of 112 points.

    Analysts at Arif Habib Limited said that the market made a repeat of yesterday, opening 204 points up, increasing by 304 points in total during the session and closing 112 points.

    Fertilizer sector played an important role in posting gains on the index, primarily due to announcement of package for the farmers towards purchase of DAP and Tractors.

    Resultantly, FFBL hit upper circuit whereas other Fertilizer sector scrips also went up before facing selling pressure.

    Cement, Steel, Banks and E&P sector largely traded range bound. Upward movement in international crude prices even couldn’t excite investors.

    Technology sector topped the index with 40.7 million shares, followed by Cement (29.1 million) and Chemical (21.3 million).

    Among scrips, TRG realized 20.9 million shares, followed by UNITY (18.6 million) and AGL (14.8 million).

    Sectors contributing to the performance include Fertilizer (+80 points), Inv Banks (+31 points), Food (+27 points), Technology (+24 points), E&P (+23 points), Banks (-59 points), Power (-32 points) and Cement (-28 points).

    Volumes increased from 219.2 million shares to 240.2 million shares (+10 percent DoD). However, average traded value declined by 25 percent to reach US$ 38.5 million as against US$ 51 million.

    Stocks that contributed significantly to the volumes include TRG, UNITY, AGL, FFL and MLCF, which formed 32 percent of total volumes.

    Stocks that contributed positively to the index include FFC (+48 points), NESTLE (+26 points), DAWH (+26 points), MTL (+25 points) and OGDC (+18 points). Stocks that contributed negatively include HUBC (-31 points), HBL (-22 points), ABL (-20 points), BAHL (-10 points), and LUCK (-10 points).

  • Equity market increases by 90 points amid selling pressure

    Equity market increases by 90 points amid selling pressure

    KARACHI: The equity market increased by 90 points on Wednesday amid selling pressure witnessed during the day.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 33,693 points as against 33,603 points showing an increase of 90 points (+0.3 percent DoD).

    Analysts at Arif Habib Limited said that market opened on a positive note today with +125 points and maintained the momentum from yesterday, gaining 200 points before facing resistance.

    MSCI rebalancing did not result in HBL’s ouster, which is the main reason for selling pressure in HBL in the past sessions.

    HBL posted price gains but still stayed within limits. Cement sector bore selling pressure, as did Power and E&P sectors.

    Among pharma stocks, FEROZ posted a consistent upper circuit, whereas buying activity was also observed in SEARL.

    Among O&GMCs, SNGP faced selling pressure due to exclusion from MSCI EM Index.

    Cement sector led the volumes with 69.1 million shares, followed by Technology (32.1 million) and O&GMCs (16.1 million).

    Among scrips, MLCF had 23.2 million shares, followed by DCL (16.2 million) and TRG (15.9 million).

    Sectors contributing to the performance include Banks (+72 points), E&P (+41 points), Pharma (+17 points), Technology (+13 points), Power (-19 points) and Inv Banks (-16 points).

    Volumes declined from 224.5 million shares to 219.2 million shares (-2 percent DoD). Average traded value, on the contrary, increased by 11 percent to reach US$ 51.0 million as against US$ 45.9 million.

    Stocks that contributed significantly to the volumes include MLCF, TRG, DCL, FCCL and HASCOL, which formed 34 percent of total volumes.

    Stocks that contributed positively to the index include HBL (+37 points), PPL (+29 points), MARI (+18 points), TRG (+18 points) and MCB (+15 points). Stocks that contributed negatively include SNGP (-27 points), HUBC (-22 points), ENGRO (-19 points), DAWH (-16 points), and EFUG (-11 points).

  • Equity market gains 319 points on policy rate cut hope

    Equity market gains 319 points on policy rate cut hope

    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).

  • PSX seeks permanent reduction in tax rate for listed companies

    PSX seeks permanent reduction in tax rate for listed companies

    KARACHI: Pakistan Stock Exchange (PSX) has recommended to lower the rate of tax for listed companies in order to encourage listing in the equity market.

    “The tax rate should be permanently lowered for listed companies, by giving tax credit of 20 percent of tax payable for those companies that meet the prescribed requirements including a minimum free float of 25 percent throughout,” the PSX suggested in its proposals for budget 2020/2021.

    The stock exchange said that in order to encourage new listings, the Finance Act, 2011 introduced Section 65C of the Income Tax Ordinance, 2001; whereby tax credit equal to twenty percent (20 percent) for the tax year in which a company opts for enlistment on the Stock Exchange was allowed.

    Currently, the tax credit is given for four years from the date of listing, subject to the condition that for the first two tax years.

    This tax credit is very insignificant and not enough to attract new listings.

    It is generally observed that when companies opt for a listing on a stock exchange, their profits enhance substantially due to effective corporate governance, better disclosures, and availability to additional funds from the market.

    Increased profitability ultimately leads to higher tax revenue for the government as the number of listed companies on PSX grows. Higher listings, coupled with regulations to increase trading activity will result in higher liquidity, and also lead to incremental government revenues from capital gain tax.

    The table below outlines the five-year summary of listing and de-listing on the PSX:

    ParticularsNumber of CompaniesCapital (Rs.)*
    New Listings2462,607 Million
    De-Listings4212,971 Million
    Delisted due to merger9140,535 Million

    *As of December 31, 2019

    Giving rationale to the proposals, the PSX said that It is generally observed that publically-listed companies are able to improve profitability due to effective corporate governance, better corporate disclosure and availability of additional funds.

    The incremental benefits arising from the preferential tax structure for listed companies will foster a business environment that encourages new listings on the stock exchange, resulting in higher trading volumes and lead to:

    a) Higher tax revenue from listed companies’ income as a result of higher corporate profits

    b) Higher revenues from tax on brokers activity on new listings

    c) Higher revenue from Capital Gains Tax on disposal of newly listed securities.

  • Stock market trades in narrow range

    Stock market trades in narrow range

    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).

  • FBR proposed to eliminate distortion in withholding tax on dividends from equity investments

    FBR proposed to eliminate distortion in withholding tax on dividends from equity investments

    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 investmentsProfit paid is more than rupees five hundred thousandProfit paid is rupees five hundred thousand or less
    Profit on Debt u/s 15115 percent10 percent
    Sukuk-holder (individual or an association of person), if the return on investment is more than one million U/S 150A12.5 percent
    Sukuk-holder (individual and an association of person), if the return on investment is less than one million U/S 150A10 percent
    Dividend U/S 150 & 236S15 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.’

  • PSX proposes reduction of withholding tax on margin financing transactions

    PSX proposes reduction of withholding tax on margin financing transactions

    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.

    (more…)
  • Weekly Review: market likely remain range bound

    Weekly Review: market likely remain range bound

    KARACHI: The stock market likely to stay range bound in coming week owing to ease in lockdown.

    Analysts at Arif Habib Limited said that the market to remain range bound in the coming week.

    With standard operating procedures in place, lockdown will be easing off next week, business community and economy will get a sigh of relief.

    Whereas, given foreign reserves clocking-in at USD 18.8 billion, up by USD 292 million WoW, Pak Rupee is expected to remain stable against the greenback (which is a major positive for foreign investment).

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 7.0x (2020) compared to Asia Pac regional average of 10.2x and while offering DY of ~8.4 percent versus ~3.1 percent offered by the region.

    Market commenced on a negative note this week, with investors resorting to profit taking.

    With a massive fall in exports by 54 percent YoY in last month followed by a fall in cement dispatches by 24 percent YoY in April 2020 amid lockdown weak sentiment prevailed.

    Furthermore, IMF’s prediction regarding total foreign reserves depletion by USD 1.9 billion in the coming 15 months added fuel to this decline.

    Moreover, 12 month T Bill cut off yield climbed up by 28 basis points. Meanwhile, Federal Govt.’s decision to ease off lockdown from Saturday and onwards was not received well given alarming jump in COVID-19 cases on day-on-day basis.

    Whereas, announcement of reduction in RLNG prices for the month of May 2020 cushioned the dip.

    The KSE-100 index settled at 33,268 points, shedding 884 points (down by 2.5 percent) WoW.

    Sector-wise negative contributions came from i) Commercial Banks (231 points), ii) Cement (211 points), iii) Power Generation & Distribution (156 points), iv) Fertilizer (148 points) and Oil & Gas Exploration Companies (99 points).

    Meanwhile, sector-wise positive contribution came from i) Oil and Gas Marketing Companies (76 points), Food & Personal Care Products (34 points) and Technology & Communication (21 points). Scrip-wise negative contributions were led by HUBC (126 points), LUCK (102 points), HBL (82 points), FFC (76 points) and MCB (74 points).

    Foreign selling continued this week clocking-in at USD 17.8 million compared to a net sell of USD 11.6 million last week.

    Selling was witnessed in Exploration & Production (USD 7.1 million) and Commercial Banks (USD 5.1 million).

    On the domestic front, major buying was reported by Individuals (USD 20.3 million) and Companies (USD 5.7 million).

    Average Volumes settled at 190 million shares (up by 7 percent WoW) while average value traded clocked-in at USD 46 million (down by 5 percent WoW).