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Tag: Pakistan Stock Exchange

  • Stocks remain volatile on expected harsh measures

    Stocks remain volatile on expected harsh measures

    KARACHI: Pakistan stock remained volatile on Wednesday as investors are expecting harsh measures in the upcoming federal budget 2022/2023.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) ended at 41,553 points as compared with previous day’s closing of 41,568 points, showing a decline of 15 points.

    READ MORE: Pakistan stocks end flat as investors eyeing budget

    Analysts at Arif Habib Limited said that the PSX continued to remain under pressure throughout the day due to concerns regarding adverse upcoming budget and mounting inflation.

    The federal budget is scheduled on June 10, 2022.

    The benchmark KSE-100 index witnessed a volatile session as investors opted to remain sideways as lackluster volume was witnessed in the main board stocks whereas hefty volumes were observed in 3rd-tier stocks. Banking sector stayed in the red zone due to expectation of higher super tax and increase in other taxes in the upcoming budget. 

    READ MORE: Pakistan stocks gain 262 points in mixed trading

    The Index closed at 41,553.16 points, down by 15.25 points (-0.04 per cent DoD). Sectors contributing to the performance include Banks (-62.9 points), Fertilizer (-18.2 points), Textile (-15.7 points), Automobile Assemblers (-14.2 points) and Insurance (-8.9 points).

    READ MORE: Weekly Review: stocks to move with budget reports

    Volumes decreased from 157.4 million shares to 151.1 million shares (-4.0 per cent DoD). Average traded value increased by 6.2 per cent to reach US$ 22.3 million as against US$ 21.0 million.

    Stocks that contributed significantly to the volumes are UNITY, DGKC, OBOYR1, TPLP and PRL.

    READ MORE: Pakistan stocks plunge by 923 points on fiscal weakness

  • Pakistan stocks end flat as investors eyeing budget

    Pakistan stocks end flat as investors eyeing budget

    KARACHI: Pakistan stocks ended flat on Tuesday as investors are waiting for federal budget announcement, which is scheduled on June 10, 2022.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) ended 41,568 points from previous day’s closing of 41,577 points, showing decline of nine points.

    READ MORE: Pakistan stocks gain 262 points in mixed trading

    Analysts at Topline Securities said that Pakistan equities witnessed a mix trend today as all eyes are now on the upcoming budget.

    Investors opted to stay sidelines which compelled benchmark index to slide. During the day, the KSE 100 index made an intraday low at 41,524 (-53 points; down 0.12 per cent) and an intraday high at 41,854 (+277 points; up 0.66 per cent) before eventually settled at 41,568 (-9 points; down 0.02 per cent) for the day.

    READ MORE: Weekly Review: stocks to move with budget reports

    Banks, Tech, Food and Power sector’s stocks contributed negatively today to the benchmark index where HBL, TRG, UNITY & HUBC lost 57 points, cumulatively. On the flip side, NML, SNGP & MARI have seen some buying interest as they added 44 points collectively today.

    Around 157 million shares traded today at the bourse while total value clocked in at Rs4.2 billion. TPLP was the volume leader of the day with trading of 17 million shares in it, today.

    READ MORE: Pakistan stocks plunge by 923 points on fiscal weakness

    Analysts at Arif Habib Limited said that a range-bound session was observed at PSX today given further devaluation of PKR against USD tagged with concerns of new taxes in the upcoming budget, keeping the investors at bay. The volumes remained dry in the main board although 3rd tier stocks continued positive momentum.

    Sectors contributing to the performance include Banks (-21.0 points), Technology (20.5 points), Power (-13.1 points), Vanaspati & Allied (-11.9 points) and Investment Banks (-8.7 points).

    READ MORE: Stocks shed 518 points on monetary tightening concerns

    Volumes decreased from 189.2 million shares to 157.4 million shares (-16.8 per cent DoD). Average traded value also decreased by 13.8 per cent to reach US$ 20.8 million as against US$ 24.2 million.

    Stocks that contributed significantly to the volume are TPLP, UNITY, PRL, OBOYR1 and SNGP.

  • Pakistan stocks gain 262 points in mixed trading

    Pakistan stocks gain 262 points in mixed trading

    KARACHI: Pakistan stocks gained 262 points on Monday after witnessing a mixed trading sessions during the day.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) ended at 41,577 points as compared with last Friday’s closing of 41,315 points, showing an increase of 262 points.

    READ MORE: Weekly Review: stocks to move with budget reports

    Analysts at Topline Securities said that Pakistan equities closed on a green note where benchmark KSE-100 Index settled at 41,577 Level (up 0.63 per cent).

    During the day, the KSE-100 index made an intraday low at 282 points. However, value hunting kicked in at the aforesaid level which assisted benchmark index to show some recovery which led to make an intraday high of 360 points.

    READ MORE: Pakistan stocks plunge by 923 points on fiscal weakness

    Initial positivity came from Cement sector as cement prices in the South region have increased by Rs25/bag (effective from June 6, 2022) where LUCK, MLCF,DGKC, KOHC closed higher.

    Further investors’ interest also witnessed E&Ps sector where PPL, OGDC and SNGP closed higher as news flows suggest that OGRA has raised gas prices for SNGPL & SSGC by 45 per cent & 44 per cent.

    READ MORE: Stocks shed 518 points on monetary tightening concerns

    Around 186.31 million shares traded today at the bourse while total value clocked in at Rs4.9 billion. UNITY was the volume leader of the day with trading of 33.13 million shares in it, today.

    READ MORE: Pakistan stocks shed 322 points on budgetary concerns

  • Compliance cost much higher for corporatization: PSX

    Compliance cost much higher for corporatization: PSX

    KARACHI: Pakistan Stock Exchange (PSX) has said that tax rates for compliance by corporate entities is much higher than the persons out of the tax net.

    The PSX in its proposals for budget 2022/2023 submitted to Federal Board of Revenue (FBR), said corporate business profits are taxed twice. Once at company level at 29 per cent and on dividend distribution at 15 per cent.

    READ MORE: FBR suggested reduction in tax rates for equity funds

    As compare to 44 per cent of total tax in case of companies, unincorporated businesses are being taxed from 0 per cent to 35 per cent in slabs.

    This inequality in taxation is discouraging corporatization and documentation as unincorporated businesses are subject to substantially lower taxes.

    Absence of clarity in tax laws is causing issues of taxation of Limited Liability Partnership (LLPs) as companies whereas LLPs are essentially AoPs with perpetual life.

    Removal of exemption on inter-corporate dividend under section 59B of the Income Tax Ordinance, 2001 is unfavorable to potential corporate groups discouraging compliance with the best practices of corporate governance requirements.

    READ MORE: PSX proposes tax exemption on property transactions

    The PSX said that inequality of taxation of business shall gradually be removed by reducing corporate tax rate/increasing tax rates for AoPs [First Schedule Part 1, Division I, II, IIA & III].

    Restoration of exemption on inter-corporate dividend between companies eligible for group taxation under section 59B of the Income Tax Ordinance, 2001.

    Giving rationale to the proposal, the PSX said that equality of tax regime will promote corporatization culture leading towards documentation and will therefore generate more tax revenue.

    Adding clarity with respect to status of LLP will encourage more business particularly in services sector to opt for this perpetual business structure. It will also help in increasing tax revenue from these segments.

    READ MORE: SMEs should be given tax credit to encourage listing

    Definition of AoP in section 80(2) of Income Tax Ordinance, 2001 be amended to include LLP till the time same tax rates are not applied to all forms of business.

    Part I, Second Schedule, clause 103C reinstated as follows:

    “Dividend income derived by a company, if the recipient of the dividend, for the tax year is eligible for group relief under section 59B.”

    READ MORE: FBR urged to eliminate minimum tax for listed companies

  • FBR suggested reduction in tax rates for equity funds

    FBR suggested reduction in tax rates for equity funds

    KARACHI: The Federal Board of Revenue (FBR) has been suggested to reduce income tax rates for private equity funds in the upcoming budget 2022/2023.

    Pakistan Stock Exchange (PSX) in its proposals for budget 2022/2023, stated that Revamped regulations in 2015 introduced different types of Private Funds by replacing Private Equity and Venture Capital (PE&VC) Regulations.

    READ MORE: PSX proposes tax exemption on property transactions

    Currently, pass-through status under the Income Tax Ordinance 2001 is available to only PE&VCs category. Moreover, current sunset clause up to June 2024 for PE&VC is detracting long-term investors from participating.

    A private fund (alternate fund) investing in listed securities attract Capital Gain Tax (CGT) at the rates that applies to unlisted securities (redemption of units of alternate funds will attract treatment of unlisted security under CGT regime, which is significantly higher for corporate investors).

    READ MORE: SMEs should be given tax credit to encourage listing

    The PSX suggested to insert proper definition of Private Fund referring to 2015 regulations. It also suggested to reinstate exemption to PE&VC as provided under clause 101 of part I of Second Schedule; in addition to: inclusion of Private Fund; and no sun-set clause.

    The PSX recommended that specific rate of 12.5 per cent CGT be provided in Division VII of 1st Schedule of the Income Tax Ordinance, 2001 as provided for mutual funds, CIS and REITs (if more than 70 per cent invested in listed equity securities and/or debt securities).

    READ MORE: FBR urged to eliminate minimum tax for listed companies

    The stock exchange also sought exemption provided in sub-clause (xii) of clause 11A and clause 47B of Part IV of the second schedule to include Private Fund.

    Giving rationale to the proposals, the PSX said that this sector can be developed with rational taxation. So far only 4 registered PE&VC funds will be unable to meet funding needs of SMEs/startups & to attract foreign investors. Revenue impact will be neutral to positive as only CIVs will be exempted but the investors will still be obliged to pay tax. The amendment will exempt private funds from applicability of withholding tax as it is a pass through entity.

    READ MORE: PSX proposes rationalizing tax rates for listed companies

  • PSX proposes tax exemption on property transactions

    PSX proposes tax exemption on property transactions

    KARACHI: Pakistan Stock Exchange (PSX) has proposed tax exemption on transactions of immovable properties to Real Estate Investment Trusts (REITs) in order to promote documentation.

    The PSX in its proposals for budget 2022/2023 submitted to the Federal Board of Revenue (FBR), said REITS are an ideal instrument to document and help develop the real estate sector, a priority for the government.

    READ MORE: SMEs should be given tax credit to encourage listing

    They also allow smaller investors to gain exposure to the real estate sector, an important step to reduce wealth inequality in Pakistan.

    The PSX proposed exemption from advance tax on property transfer to/from a REIT Scheme u/s 236C and 236K of Income Tax Ordinance, 2001. It also suggested to remove sunset clause i.e. June 2023 for all categories of REIT. Besides, it is also suggested to reduce minimum tax rate applicable to REIT Management Companies (RMCs) u/s 153 in line with Asset Management Companies i.e. 3 per cent.

    READ MORE: FBR urged to eliminate minimum tax for listed companies

    The PSX said that it will promote documented real-estate will attract more investments particularly by companies with disclosure of actual prices and income. Revenue impact will be positive as it will generate indirect and additional revenues from allied businesses.

    Appropriate amendment to be made in the Income Tax Ordinance, 2001.

    READ MORE: PSX proposes rationalizing tax rates for listed companies

    For proposal relating to sun-set clause, remove “June 30, 2023” from clause 99A of Part I of Second Schedule of the Income Tax Ordinance, 2001.

    For proposal relating to Minimum Tax on RMCs, Clause (2)(i) of Division III of Part III of First Schedule of the Income Tax Ordinance, 2001 shall include “service rendered by RMCs.”

    READ MORE: PSX suggests grandfather tax provisions for listed companies

  • Weekly Review: stocks to move with budget reports

    Weekly Review: stocks to move with budget reports

    KARACHI: Pakistan stocks likely to move with report of federal budget 2020-2023, which is scheduled to be presented on June 10, 2022.

    Analysts at Arif Habib Limited said that the market is expected to remain range bound given Federal Budget 2022-2023 is anticipated to be announced on June 10, 2022.

    READ MORE: Pakistan stocks plunge by 923 points on fiscal weakness

    “The outcome of the budget presented will determine the market direction in the future,” the analysts said.

    Moreover, the government may opt to roll-back the remaining subsidy on petrol and diesel next week, which may further ignite inflationary concerns.

    All said, one positive development which market be looking forward to is the inflow from Chinese banks (about $2.3 billion) which, according to Finance Minister, is due shortly.

    READ MORE: Stocks shed 518 points on monetary tightening concerns

    The benchmark KSE-100 of Pakistan Stock Exchange (PSX) is currently trading at a PER of 4.1x (2022) compared to Asia Pacific regional average of 12.4x while offering a dividend yield of 9.6 per cent versus 2.7 per cent offered by the region.

    Following  the decision of partial removal of subsidy on petrol and diesel, increasing the prices by PKR 30/liter each, market commenced on a positive note this week on hopes of resumption of IMF as these measures are deemed to be a pre-requisite for the Fund’s approval for seventh review.

    READ MORE: Pakistan stocks shed 322 points on budgetary concerns

    As a result, Pak Rupee staged a recovery against the greenback (closing at PKR 197.92 this week). However, concerns over inflation (which reached a 28-month high of 13.8 per cent in May 2022) and uptick in government securities yields in T-Bill auction, dampened the sentiment at the index.

    Moreover, the jump in National Saving Schemes (NSS) rate (150bps) and the expected hike in power prices (PKR 7.91/unit) sent alarm bells ringing.

    Meanwhile, the last trading saw panic at the local bourse after Moody’s Investors Service downgraded Pakistan’s outlook from stable to negative while the announcement of another PKR 30/liter fueled inflationary concerns.

    READ MORE: Stocks remain range bound on high inflation concerns

    The market closed at 41,315 points, shedding 1,547 points (down by 3.6 per cent) WoW.

    Sector-wise negative contributions came from i) Commercial Banks (363 points), ii) Cement (309 points), iii) Fertilizer (163 points), iv) Technology & Communication (124 points), and v) Chemical (93 points).

    Whereas, sectors which contributed positively was Vanaspati & Allied Industries (1 points). Scrip-wise negative contributors were LUCK (141 points), HBL (129 points), FFC (87 points), TRG (68 points) and EPCL (55 points). Meanwhile, scrip-wise positive contribution came from POL (13 points), ABOT (10 points), MARI (9 points), SCBPL (6 points) and COLG (6 points).

    Foreign selling was witnessed this week, clocking in at $ 0.42 million compared to a net sell of $ 1.51 million last week. Major selling was witnessed in Banks ($ 4.2 million) and Cement ($ 0.4 million).

    On the local front, buying was reported by individuals ($ 5.6 million) followed by Companies ($ 5.6 million). Average volumes clocked in at 210 million shares (down 25 per cent WoW) while average value traded settled at $ 30 million (down 23 per cent WoW).

  • SMEs should be given tax credit to encourage listing

    SMEs should be given tax credit to encourage listing

    KARACHI: Pakistan Stock Exchange (PSX) has urged the tax authorities to allow tax credit to Small and Medium Enterprises (SMEs) to encourage listed on the stock exchange.

    The PSX in its proposals for budget 2022/2023 submitted to the Federal Board of Revenue (FBR), said SMEs contribute immensely to Pakistan’s employment, export and GDP growth, and provide 80 per cent of all employment in the country.

    READ MORE: FBR urged to eliminate minimum tax for listed companies

    A well-functioning SME segment at the Stock Exchange offers a range of benefits including greater access to growth capital for innovative SMEs, documentation, good governance, new jobs through entrepreneurship, more investment opportunity for domestic investors and local venture capitalists.

    PSX has launched an SME board to attract smaller companies to get listed on the exchange. The aim is to facilitate SMEs with an alternative to bank financing for their expansion growth and projects.

    READ MORE: PSX proposes rationalizing tax rates for listed companies

    In order to encourage small and medium enterprises to get listed on the SME Board, it is proposed that the rate of tax for such listed SME companies be permanently lowered by giving tax credit of 50 per cent of tax payable for 3 to 4 years of listings and then onwards 20 per cent of the tax payable.

    The PSX said that the share of the manufacturing sector in the job market is only 14 per cent. This is very low because 80 per cent of the manufacturing investments in large scale industries provide less than 20 per cent of the manufacturing jobs. Over 80 per cent jobs are provided by SMEs.

    READ MORE: PSX suggests grandfather tax provisions for listed companies

    There are significant fiscal tax credit benefits in Spain, Kenya, Brazil, Argentina and other parts of the world for SMEs.

    The PSX proposed: In clause (iii), Division II, Part I of the First Schedule to the Income Tax Ordinance, 2001 after a colon the following proviso shall be added, namely:

    READ MORE: PSX proposes launch of saving, investment accounts

    “Provided that where a tax payer is a small or medium sized company as defined under the Third Schedule of the Companies Act, 2017 and is also listed on the registered Stock Exchange in Pakistan, the tax credit @ 50% of the tax payable on the taxable income of such company, other than a banking company, shall be allowed for the tax year 2021 and onwards.”

  • Pakistan stocks plunge by 923 points on fiscal weakness

    Pakistan stocks plunge by 923 points on fiscal weakness

    KARACHI: Pakistan stocks plunged by 923 points on Friday owing to weakening fiscal condition and concerns of further monetary tightening.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) ended at 41,315 points from previous day’s closing of 42,238 points, showing a decline of 923 points.

    READ MORE: Stocks shed 518 points on monetary tightening concerns

    Analysts at Arif Habib Limited said that the benchmark KSE-100 index witnessed yet another bloodbath session today due to monetary tightening and inflationary concerns.

    The market opened in the negative zone and remained under pressure throughout the day as investors opted for profit selling over uncertain economic scenarios.

    READ MORE: Pakistan stocks shed 322 points on budgetary concerns

    The volumes remained dull across the board on the contrary hefty volumes were observed in the 3rd tier stocks.

    Sectors contributing to the performance include Banks (-176.8 points), Cement (-131.7 points), Fertilizer (-96.4 points), Technology (-79.5 points) and E&P’s (-71.1 points).

    READ MORE: Stocks remain range bound on high inflation concerns

    Volumes increased from 157.0 million shares to 225.4 million shares (+43.6 per cent DoD). Average traded value also increased by 13.3 per cent to reach $30.3 million as against $26.7 million.

    Stocks that contributed significantly to the volumes are KEL, PRL, CNERGY, PAEL and PIBTL.

    READ MORE: Pakistan stocks gains 179 points on rupee appreciation

  • FBR urged to eliminate minimum tax for listed companies

    FBR urged to eliminate minimum tax for listed companies

    KARACHI: The Federal Board of Revenue (FBR) has been urged to eliminate minimum tax regime for listed companies in order to encourage documentation of economy.

    The PSX in its proposals for budget 2022/2023, submitted to the FBR stated that through the concept of minimum tax is prevalent in a few other countries, however, in other countries, as a principle, it is levied only in cases where high-income taxpayers don’t pay any tax due to different tax exemptions available to them.

    READ MORE: PSX proposes rationalizing tax rates for listed companies

    It suggested that minimum tax regime should be eliminated from listed companies as such companies are strongly compliant towards specific documentation requirements of various statues.

    The application of minimum tax on listed companies has resulted in discouraging documentation of the economy. Listed companies have significant documentation and regulatory requirements and need to engage external auditors to audit their business affairs.

    READ MORE: PSX suggests grandfather tax provisions for listed companies

    The stringent regulations keep the listed companies strongly complaint towards filing of income tax / sales tax returns, paying quarterly advance taxes, adjustment of withholding taxes on sales and purchases and consequently filing withholding statements, statements on final taxation and fulfilling various other requirements which resultantly align their books of accounts with the statutory requirements and provide a comfort zone to the authorities and stakeholders over the reported numbers.

    READ MORE: PSX proposes launch of saving, investment accounts

    However, the levy of minimum tax puts downward impact on the earnings of listed company despite having current and brought forward losses.

    Appropriate amendment to be made in the Income Tax Ordinance, 2001.

    READ MORE: Income tax audit should be once in three years