Karachi, February 6, 2025 – The Pakistan Stock Exchange (PSX) witnessed a tumultuous week, with the benchmark KSE-100 index extending its losing streak for a third consecutive session.
On Thursday, the KSE-100 index shed a significant 1,634 points, closing at 110,310, down from 111,935 on Tuesday, February 4, 2025.
The market was closed on Wednesday, February 5th, for the Kashmir Day public holiday. This latest decline brings the cumulative loss for the KSE-100 index to a staggering 3,955 points over the past three trading days.
Market analysts attribute this sharp downturn in the KSE-100 index to several converging factors. Prominent among these is the anticipation of a new tax package targeting the real estate sector. Investors fear that such a package, potentially incentivizing investment in property, could divert funds away from the stock market, negatively impacting the KSE-100. Prime Minister Shehbaz Sharif is expected to convene a meeting to discuss the final recommendations of a task force focused on this issue. The task force has proposed the elimination of taxes on property transactions, a move that has triggered concern within the investment community about its potential impact on the KSE-100.
Adding to the market’s anxieties are concerns about Pakistan’s ability to meet the targets set by the International Monetary Fund (IMF). The IMF mission is scheduled to arrive in Pakistan in late February or early March for the first review of the $7 billion Extended Fund Facility (EFF) program. Any perceived shortcomings in meeting IMF targets could further dampen investor sentiment and put additional pressure on the KSE-100.
Saad Hanif, Head of Research at Ismail Iqbal Securities, highlighted the real estate sector developments as a key driver of the selling pressure on the KSE-100. A recent recommendation by the National Assembly Standing Committee on Finance and Revenue to amend “The Tax Laws (Amendment) Bill, 2024” to exempt source of investment inquiries for property transactions up to Rs 50 million has fueled speculation about a shift in investment from equities to real estate. Hanif explained that this potential shift in liquidity is a major concern for the KSE-100.
Furthermore, the depreciation of the local currency and a rise in the import bill are also contributing to the negative sentiment surrounding the KSE-100.
Selling pressure was evident across key sectors, including commercial banks, fertilizer, oil and gas exploration companies, and oil marketing companies. Index-heavy stocks such as PSO, SSGC, SNGPL, MARI, POL, PPL, MEBL, and UBL all traded in the red, further dragging down the KSE-100.
Intermarket Securities noted that investors find current market levels unattractive, with top dividend yield stocks offering only a marginal yield advantage over government securities. The brokerage house predicts a range-bound market in the near term, with the upcoming IMF talks serving as a critical milestone for the future direction of the KSE-100.
The previous trading day saw the KSE-100 index decline by 810 points, closing at 111,935.38, indicating a prevailing trend of profit-taking and bearish sentiment.