Pkrevenue.com

Category: Stock & Commodity

  • KSE-100 falls by 242 points on concerns over economy in IMF program

    KSE-100 falls by 242 points on concerns over economy in IMF program

    KARACHI: The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) fell by 242 points on Tuesday due to concerns over economic condition in post IMF program.

    The share market closed at 36,784 points as against 37,026 points showing a decline of 242 points.

    Analyst at Next Capital Limited said that the stock market plunged amid growing concerns on economy post IMF program and concerns over additional taxes to be implemented in the upcoming budget.

    As per news reports, Pakistan and IMF have launched the final round of talks over the $8 billion bailout package for Islamabad, a deal that’s expected to be signed next month.

    The round started on Monday in the capital and is expected to last till May 7.

    Market participation for the 100 index decreased to 82.5 million shares from 132.4 million shares in the previous session (-37.7 percent on d/d basis).

    Major contribution to total market volume came from UNITY, PAEL, and BOP churning 28.0 million shares out of the total market volume of 110.6 million shares.

    Daily traded value for the 100 index decreased to USD28.2 million from USD38.2 million in the previous session.

    Analysts at Topline Securities said that the index extended losses for the second consecutive day as investors remained wary on upcoming events like Budget and Amnesty Scheme.

    Further, IMF technical team is also in town till May 07, which is likely to dictate key revenue measures for upcoming federal budget.

    Consequently, index lost 0.65 percent today, closing at 36,784.

    During the outgoing month, Index lost 4.8 percent – worst April month in last 14 years.

    E&Ps, Cements, and Banking sector remained top laggards with deletion of 887 points from the index.

    Investors sentiments in E&Ps were affected after offshore drilling hit a snag, while cement sector remained under pressure due to slippage in cement prices as difference of opinion still prevails among manufacturers over uniform pricing.

    Volumetric activity witnessed rise of 33 percent MoM, similarly value was up 9 percent MoM.

  • Equity market ends down by 104 points on panic selling

    Equity market ends down by 104 points on panic selling

    KARACHI: The equity market ended down by 104 points on Monday owing to panic selling.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 37,026 points as against 37,130 points showing a decline of 104 points.

    Analysts at Arif Habib Limited said that the market commenced on a positive note today and continued the rally that took place last week.

    During the session, the index increased by 307 points that was caused by Cement sector stocks hitting upper circuit.

    However, rumor regarding failure of negotiation amongst Cement manufacturers caused panic selling by investors, which resulted in index sliding in negative territory and erosion of price gains made earlier.

    Cement Sector topped the volumes with 34 million shares, followed by Banks (24 million).

    Among scrips, PIBTL led the volumes with 14 million shares followed by PAEL (11 million).

    Major sentiment dampener turned out to be E&P sector that saw heavy selling in all the E&P scrips on the back of falling international oil prices.

    Sectors contributing to the performance include Transport (+20 points), Tobacco (+19 points), E&P (-100 points), Fertilizer (-43 points), Power (-9 points), Textile (-8 points) and Cement (-7 points).

    Volumes increased from 144 million shares to 177 million shares (+23 percent DoD).

    Average traded value also increased by 22 percent to reach US$ 44.8 million as against US$ 36.7 million.

    Stocks that contributed significantly to the volumes include PIBTL, PAEL, BOP, FCCL and KEL, which formed 32 percent of total volumes.

    Stocks that contributed positively include PIBTL (+20 points), HBL (+16 points), HMB (+10 points), PMPK (+10 points), and PAKT (+9 points). Stocks that contributed negatively include PPL (-46 points), OGDC (-34 points), POL (-23 points), ENGRO (-19 points) and LUCK (-13 points).

  • PSX recommends aligning CGT on securities with immovable properties

    PSX recommends aligning CGT on securities with immovable properties

    KARACHI: Pakistan Stock Exchange (PSX) has recommended the government to align capital gain tax (CGT) on disposal of securities with the rates of CGT with immovable properties using same slabs of holding periods as those on real estate.

    The PSX in its proposals for budget 2019/2020 said that such proposal would encourage documentation in real estate activity, and lead to an easing of speculative pressure on real estate property prices in Pakistan.

    The PSX said that at present the tax rates on capital gains from the disposal of securities are prescribed using various slabs that denote the holding period of the securities.

    “The tax on these comparable slabs of holding periods of securities is higher than those for immovable property, and not aligned with the CGT on disposal of real estate, and result in making the real estate sector particularly appealing to investors when compared to capital markets.”

    The alignment of these tax rates will also lead to an easing of speculative pressure on real estate property prices in Pakistan, where much of the undocumented wealth has been currently flowing.

    The PSX proposed amendment in Division VII, Part I of the First Schedule to the Income Tax Ordinance, 2001, the following new table shall be interested in place of existing table:

    For securities acquired on or after July 01, 2016

    01. Where holding period of a security is up to on year: 10 percent for filer, 20 percent for non-filer

    02. Where holding period of a security is more than or equal to one year but less than two years: 7.50 percent for filers, 20 percent for non-filers

    03. Where holding period of a security is more than or equal to two years but less than three years: 5 percent for filers, 20 percent for non-filers

    04. Where holding period of a security is more than three years: zero percent for both filers and non-filers

    For securities acquired before July 01, 2016:

    05. Where holding period of a security is up to three years: 5 percent for filers, 20 percent for non-filers

    06. Where holding period of a security is more than three years: zero percent for both filers and non-filers.

    The PSX in its proposals for budget 2019/2020 said that such proposal would encourage documentation in real estate activity, and lead to an easing of speculative pressure on real estate property prices in Pakistan.

    The PSX said that at present the tax rates on capital gains from the disposal of securities are prescribed using various slabs that denote the holding period of the securities.

    “The tax on these comparable slabs of holding periods of securities is higher than those for immovable property, and not aligned with the CGT on disposal of real estate, and result in making the real estate sector particularly appealing to investors when compared to capital markets.”

    The alignment of these tax rates will also lead to an easing of speculative pressure on real estate property prices in Pakistan, where much of the undocumented wealth has been currently flowing.

    The PSX proposed amendment in Division VII, Part I of the First Schedule to the Income Tax Ordinance, 2001, the following new table shall be interested in place of existing table:

    For securities acquired on or after July 01, 2016

    01. Where holding period of a security is up to on year: 10 percent for filer, 20 percent for non-filer

    02. Where holding period of a security is more than or equal to one year but less than two years: 7.50 percent for filers, 20 percent for non-filers

    03. Where holding period of a security is more than or equal to two years but less than three years: 5 percent for filers, 20 percent for non-filers

    04. Where holding period of a security is more than three years: zero percent for both filers and non-filers

    For securities acquired before July 01, 2016:

    05. Where holding period of a security is up to three years: 5 percent for filers, 20 percent for non-filers

    06. Where holding period of a security is more than three years: zero percent for both filers and non-filers.

  • Weekly Review: positive sentiments to prevail in stock market

    Weekly Review: positive sentiments to prevail in stock market

    KARACHI: The stock market is expected to experience positive momentum in the coming week as Prime Minister Imran Khan’s visit to China and the arrival of an International Monetary Fund (IMF) team in Pakistan generate optimism among investors.

    (more…)
  • Equity market gains 335 points amid optimism on IMF loan program

    Equity market gains 335 points amid optimism on IMF loan program

    KARACHI: The equity market gained 335 points on Friday amid optimistic sentiment over IMF loan program.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 37,130 points as against 36,796 points showing an increase of +335 points.

    Analysts at Arif Habib Limited said that the market increased consecutively with another 362 points during the day and ended the session +335 points.

    Optimism can clearly be seen from market participants, which emanates from likely conclusion of IMF package in the first week of May as well as PM’s visit to China.

    Cement sector performed well on the news of settlement of sales quota amongst cement manufacturers on upcoming meeting coming Monday.

    A host of result announcements also helped prop-up the index. BOP topped the volumes table with 20M shares, followed by PAEL (9 million) and UNITY (7 million).

    Banking sector performed well with 27 million shares, which was followed by Cement Sector (23 million shares).

    Sectors contributing to the performance include Cement (+104 points), Tobacco (+38 points), Power (+34 points), Autos (+28 points) and Fertilizer (+19 points).

    Volumes increased from 106.8 million shares to 146.8 million shares (+35 percent DoD). Average traded value also increased by 23 percent to reach US$ 36.8 million as against US$ 29.8 million.

    Stocks that contributed significantly to the volumes include BOP, PAEL, UNITY, TRG and FCCL, which formed 35 percent of total volumes.

    Stocks that contributed positively include LUCK (+51 points), PAKT (+32 points), DAWH (+23 points), DGKC (+16 points), and FCCL (+16 points). Stocks that contributed negatively include MCB (-16 points), BAHL (-15 points), UBL (-9 points), IGIHL (-6 points) and FFC (-5 points).

  • PSX proposes scheme for attracting investment from black economy

    PSX proposes scheme for attracting investment from black economy

    KARACHI: Pakistan Stock Exchange (PSX) has advised the government to introduce a scheme for attracting investment from large black economy.

    In its budget proposals for fiscal year 2019/2020 the stock exchange advised the government to introduce a mechanism and regulatory structure for the launch of registered savings and investment accounts (RSIA) to help channel savings towards productive investments.

    “RSIAs will help capital from the large undocumented sector into the formal economy. Further. It is also crucial firm guarantees be offered that contributions be subject to full amnesty – aside from Anti-Money Laundering and Terrorist Financing issues diligence.”

    Giving rationale to its proposal, the PSX said that where they have been introduced, registered savings and investment accounts have been very successful in channeling saving to productive investments through capital markets and often constituents the main source of income in retirement.

    In Pakistan, they will bring the added benefit of driving the government’s goal to document the informal sector.

    RSIAs could become one of the driving forces in the transformation of Pakistan’s economy. By some estimates, 40 million middle-class Pakistanis have an average accumulated wealth of $10,000 for a total over Rs50 trillion.

    “Much of that wealth is currently investment in real estate, gold and other asset classes in Pakistan and offshore. If RSIAs can capture 10 percent of that wealth, it would be equivalent to more than half the current market capitalization of PSX listed companies or more than the outstanding amount of PIBs and Sukuks.

    The stock market proposed the new scheme to be introduced in the Income Tax Ordinance, 2001.

    The PSX recommended that initially there should be no limit to the amount an investor can contribute to a RSIA. “In this way, the government would maximize the benefits of RSIAs described above, including tax revenue upon withdrawal. Furthermore, unlike VPSs, no tax credit should be given with regard to contributed amounts.”

    It is further recommended that all income within the account such as capital gains and dividends should be tax free, like VPSs. It is this feature and the opportunity to legally invest in capital market instruments that will attract capital from the informal sector.

    “Investment should be limited to listed equities, ETFs, tradable bonds and mutual funds. Principle-based prudential rules must be adopted to ensure protection of client assets and suitability of investments.”

    The PSX said that withdrawals should be treated a taxable income because contributions are presumed to have been made from sources that have not been taxed.

    “Unlike VPSs, investors should be allowed to withdraw capital from the account any time they want. That feature is key in attracting capital from wealthy individuals who may otherwise not want to lock up their capital.”

  • PSX’s net profit falls by 10.6pc on elimination of tax on bonus shares

    PSX’s net profit falls by 10.6pc on elimination of tax on bonus shares

    KARACHI: The earning of Pakistan Stock Exchange (PSX) during first nine months of current fiscal year fell by 10.6 percent due to elimination of tax on bonus shares, which results no dividend received by the capital market.

    The stock market on Friday released its financial report and said that its earnings were Rs59 million during July-March 2019 as compared with Rs66 million in the corresponding period of the last fiscal year.

    The PSX said that foreign investors had been balancing their portfolios since the net buy position for the third quarter 2019 stood at over $31.3 million. “This indicates their optimism about the long term prospects of Pakistan’s equity market,” it said.

    “However, during the nine months period ended March 31, 2019, the foreign investors off-loaded securities worth $373 million which was absorbed by the local investors,” it added.

    During the period, the Finance Supplementary (Second Amendment) Act, 2019 was enacted in March 2019 and some notable features favorable to the capital market include abolishment of the advance tax at 0.02 percent on purchase and sale value of shares traded in lieu of tax on commission applicable to members of the stock exchange, loss on disposal of securities would be allowed to carry forward to the next year and subsequent two tax years, to be offset against capital gain earned in those years and effective July 01, 2019, for companies availing group relief, tax on inter-corporate dividend has been reduced to the extent of percentage of shareholding the recipient of dividend has in the distributing company.

    PSX recorded a pre-tax profit of Rs64 million for the nine-month period ended March 31, 2019 against Rs122 million for the corresponding period of the last fiscal year, posting 48 percent decline.

    During the year, PSX implemented revised fee structure for the annual listing fee. This structure resulted increase in revenue by Rs113 million during first nine months of current fiscal year.

  • PSX recommends CGT exemption to foreign investors

    PSX recommends CGT exemption to foreign investors

    KARACHI: Pakistan Stock Exchange (PSX) has proposed to exempt capital gain tax (CGT) on disposal of securities by foreign investors.

    The PSX in its proposals for budget 2019/2020 on Thursday, recommended the exemption of CGT on disposal of securities by foreign investors.

    Giving rationale to its proposals, the PSX said that the exemption of CGT on foreign investors would facilitate substantial capital inflow by relaxing the cumbersome and time consuming account opening and registration process for foreigners as they get discouraged and overwhelmed with the current registration structure and look for better investment alternatives in regional markets.

    It further said that Pakistan has taxation treaties with a number of countries thus foreigners would be liable to pay taxes according to the treaty. “Therefore, taxing foreigners would burden them and not only increase their cost of business but most importantly discourage them from investment in Pakistan’s capital market.”

    It is proposed that the proviso to sub – rule 2 of Rule 13N of Income Tax Rules, 2002 shall be omitted.

    The PSX said that it is observed that most countries do not impose capital gains tax on disposal of securities by foreigners.

    Bangladesh, Malaysia, and many other countries do not levy CGT on transactions of disposal of securities conducted by foreigners.

    Even in countries that do have CGT on foreign investors, the rules are distinctly different from those that apply to domestic investors, in order to provide an attractive tax environment and avoid double taxation.

    One important reason for not imposing such tax is that most of the countries have double taxation treaties.

    In Pakistan, foreign investors file income tax returns regularly and pay taxes in accordance with the provisions of the Income Tax Ordinance, 2001 or reduced rates provided under treaties executed with such countries.

    Foreign investors should be given preferential tax rates as they might still be required to pay taxes in their home country where they are considered as a resident taxpayer.

    The PSX also urged the tax authorities to review the mechanism for payment of CGT on disposal of securities for domestic investors.

    It said that at present National Clearing Company of Pakistan Limited (NCCPL) calculates and collects Withholding Tax on Capital Gains made on disposal of shares listed on Pakistan Stock Exchange Limited.

    However, it is witnessed that in many countries there is no capital gain tax collected by any institution but rather individuals/ corporate are required to file their tax returns and pay taxes if any on the capital gains made by trading of shares.

    A broad range of countries including Canada, USA, Indonesia, India, and Vietnam do not mandate the collection of CGT by any intermediary at the time of disposal of securities, and the CGT is payable at the time of filling of returns.

    In Singapore, Hong Kong, Malaysia and Mauritius there is no capital gains tax.

    Therefore, considering international perspective, it would be appropriate if in Pakistan, payment of capital gains tax be made obligatory on individuals and corporates and the status of NCCPL should be such that only the information is provided to the tax authorities by NCCPL.

    In line with the common practice internationally, the government should review and revise the mechanism for payment of tax on capital gains for filers.

    An alternative to the current convention should be explored along with pros and cons. Withholding tax at NCCPL level for filers should be debated thoroughly and replaced with the obligation on investors who are filer to pay CGT through annual tax returns.

    However, the current mechanism of withholding on CGT for investors who are non-filers shall remain the same provided no WHT on such non-filers whose Capital Gains is up to Rs100,000 per annum.

    In any case, NCCPL should provide information on all investors’ capital gains and losses to tax authorities for tracking purposes.

    In line with international practice for collection of capital gains tax, an obligation to file returns and pay taxes on disposal of securities at year end would encourage a widespread tax culture among investors.

    It is proposed that section 100B, 8th Schedule to the Income Tax Ordinance 2001 and Rule 13N of Income Tax Rules, 2002 shall be amended accordingly.

  • Stock market gains 292 points in volatile trading

    Stock market gains 292 points in volatile trading

    KARACHI: The stock market gained 292 points on Thursday amid highly volatile trading sessions.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 36,796 points from previous day’s closing of 36,504 points with gain of 292 points.

    Analyst at Next Capital Limited said that the decline in international oil prices after the US Energy Information Administration (EIA) reported a much bigger than expected rise in commercial crude inventories kept the oil stocks under pressure throughout the day.

    Pakistan Petroleum Limited recorded (-0.43 percent) and Pakistan Oil Fields (-0.86 percent).

    Market participation for the 100 index decreased to 84.2 million from 93.1 million in the previous session.

    Major contribution to total market volume came from BOP, WTL, and LOTCHEM churning 25.1 million shares out of the total market all share volume of 106.8 million shares.

    Analysts at Topline Securities said that following fall of around 5.5 percent in month of April (till 24th), index slightly recovered 0.8 percent as amnesty scheme is likely to be presented in front of cabinet next week.

    Further, likely meeting of Prime Minister Imran with IMF chief in China and expected arrival of IMF mission from Apr 27-30, 2019 also restored investors confidence in getting bailout package.

  • Trading restores at PSX after technical fault

    Trading restores at PSX after technical fault

    The Pakistan Stock Exchange (PSX) experienced a temporary suspension in trading on April 25, 2019, lasting for over an hour due to a technical fault.

    (more…)