KARACHI: The share market is likely to continue gaining momentum during the next week owing to positive reports on economic front.
(more…)Tag: Pakistan Stock Exchange
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Introduction of registered savings, investment accounts proposed
KARACHI: Pakistan Stock Exchange (PSX) has proposed introduction of registered savings and investment accounts (RSIAs) in the upcoming budget 2020/2021.
In its budget proposals for the fiscal year 2020/2021, the PSX said that saving and investment are crucial for playing an important role in the process of socio-economic development through capital accumulations.
Pakistan, besides facing problems such as unemployment, rapid growth of population, slow economic growth in the country, has a saving rate that is meager and undesirable for sustainable national economic development. Low level of saving rates in any economy have been cited as one of the most serious constraints to sustainable economic growth.
Higher savings and the related increase in capital formation can be result in a permanent increase in economic growth rates.
Registered savings and investments accounts (RSIAs) are personal accounts that allow investors to accumulate savings (e.g., Individual Retirement Accounts and Roth IRAs in the US, Registered Retirement Savings Plans and Tax Free Savings Accounts in Canada).
Other variations on the theme promote saving toward other goals like children’s education (Registered Retirement Saving Plans in Canada) or funding future needs of a disable individual (Registered Disability Savings Plan in Canada).
Although their design varies according to the schemes objective, they all have 2 features in common:
— Capital accumulates free of tax (on interest, dividend or capital gains) as long as it stays in the account;
— Eligible investments in the account are listed stocks and ETFs, tradable bonds and mutual funds
In the United States, Roth Individual Retirement Arrangement (Roth IRA) is similar to TFSA. The Roth IRA was established by the Taxpayer Relief Act of 1997.
The total contribution allowed per year to all IRAs is the lesser of one’s taxable compensation. The Packwood-Roth plan would have allowed individuals to invest up to $2,000 in an account with no immediate tax deductions, but the earnings could later be withdrawn tax-free at retirement.
Therefore, it is proposed that the Government of Pakistan introduce a mechanism and regulatory structure for the launch of registered savings and investment accounts (RSIAs) to help channel savings towards productive investments.
RSIAs will help bring capital from the large undocumented sector into the formal economy. Further, it is also crucial that firm guarantees be offered that contributions be subject to full amnesty-aside from AML and Terrorist Financing issues due diligence.
Where they have been introduced, registered savings and investment account (RSIAs) have been very successful in channeling savings to productive investments through capital markets and often constitute 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 over USD 10,000, for a total of over Rs. 50 trillion. Much of that wealth is currently invested in real estate, gold and other asset classes in Pakistan offshore. If RSIAs can capture 10% o 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.
Appropriate amendment to be made in the Income Tax Ordinance, 2001.
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Share market climbs up by 953 points on rate cut hopes
KARACHI: The share market made sharp gain of 953 points on Thursday owing to expected rate cut and reports of ease in lockdown.
The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 34,112 points as against 33,159 points showing an increase of 953 points.
Analysts at Arif Habib Limited said that just before the long weekend, the market went north today with a jump of 1020 points during the session, closing +953 points, courtesy of rising crude oil prices, expectation of rate cut and relaxation in lockdown.
Activity was observed across the board, with major contribution from oil and gas stocks i.e. E&P, OMCs, with OGDC, PPL and POL hitting upper circuits and realizing high volume trades at that level.
Banking sector stocks remained relatively muted, whereas Cement, Fertilizer and Steel sectors made considerable stride forward.
Cement sector topped the chart with 53.6 million shares, followed by O&GMCs (45 million) and Cable (28.1 million).
Among scrips, HASCOL ranked first with 37.6 million shares, followed by PAEL (26.9 million) and MLCF (25.8 million).
Sectors contributing to the performance include E&P (+308 points), Banks (+137 points), Power (+94 points), Fertilizer (+87 points) and O&GMCs (+84 points).
Volumes increased from 140.5 million shares to 291.5 million shares (+107 percent DoD). Average traded value also increased by 61 percent to reach US$ 76.7 million as against US$ 47.6 million.
Stocks that contributed significantly to the volumes include HASCOL, PAEL, MLCF, PPL and UNITY, which formed 42 percent of total volumes.
Stocks that contributed positively to the index include OGDC (+105 points), PPL (+93 points), HUBC (+82 points), POL (+64 points) and MCB (+50 points). Stocks that contributed negatively include PAKT (-12 points), DAWH (-11 points), PSEL (-9 points), SYS (-3 points), and PMPK (-2 points).
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PSX proposes abolishing capital gains tax for two years
KARACHI: Pakistan Stock Exchange (PSX) has demanded eliminating Capital Gains Tax (CGT) for up to next two years in order to attract more foreign investment.
The PSX in its tax proposals for budget 2020/2021 suggested the Federal Board of Revenue (FBR) to eliminate / reduce CGT for next 24 months or at a minimum align rates of capital gains tax on disposal of securities with other regional exchanges and OECD countries of the world.
The PSX said that currently, carry forward of losses is only allowed up to a period of three years and that last year CGT collection was merely Rs1.3 billion. Moreover, with the falling market, tax collection will not be worthwhile at all.
“Therefore, it is suggested that CGT should be eliminated for next 12-24 months.”
This will be a big headline change, with no revenue impact, and will encourage new domestic and international investors to come into the market.
The PSX made following proposals related to CGT:
i. To eliminate CGT for next 12-24 months, if that is not possible then;
ii. Since the current rate of 15 percent is very high and that too is without any benefit of holding period, therefore it is proposed to reduce this rate in line with other regional and OECD countries such as Bahrain, Hong Kong, India, Malaysia, Mauritius, Qatar, UAE, New Zealand, Hungary, Norway etc. where there is no or very low capital gain tax as compared to Pakistan.
iii. when CGT was first introduced in the year 2011, to encourage and attract long term investment, the tax rate was:
Less than six months: 10 percent
More than six months but less than 12 months: 7.5 percent
More than one year: zero percent.
The PSX proposed rates at:
Holding period up to twelve months: 10 percent
Holding period more than twelve months: zero percent.
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Stock market gains 605 points on positive sentiments
KARACHI: The stock market gained 605 points on Wednesday owing to positive sentiments prevailed during the day.
The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 33,159 points as against 32,553 points showing an increase of 605 points.
Analysts at Arif Habib Limited said that the market opened on a positive note today with +211 points at the opening bell.
The benchmark index gained 605 points during the session and closed at session’s high.
Oil stocks got traction from positive trend in international crude oil price (WTI) that increased by 14 percent and helped E&P stocks to post price gains.
Cement sector maintained the momentum throughout the day, except for realizing profit booking by the end of session, showing signs of regression in DGKC.
Banking sector stocks also stay muted amid low volumes, due to prospects of rate cut.
Cement sector posted highest trading volumes with 43.9 million shares, followed by O&GMCs (11.8 million) and E&P (10.8 million).
Among scrips, MLCF topped the volumes with 18.4 million shares, followed by HASCOL (8.2 million) and DGKC (7.3 million).
Sectors contributing to the performance include E&P (+177 points), Power (+121 points), Fertilizer (+85 points), Cement (+67 points), Inv Banks (+33 points) and Banks (-22 points).
Volumes declined from 157.9 million shares to 140.5 million shares (-11 percent DoD). Average traded value, on the contrary, increased by 31 percent to reach US$ 47.6 million as against US$ 36.3 million.
Stocks that contributed significantly to the volumes include MLCF, HASCOL, DGKC, EFERT and PIOC, which formed 33 percent of total volumes.
Stocks that contributed positively to the index include HUBC (+116 points), OGDC (+61 points), POL (+50 points), FFC (+45 points) and LUCK (+39 points).
Stocks that contributed negatively include BAHL (-35 points), HBL (-12 points), NESTLE (-8 points), HMB (-4 points), and PSO (-2 points).
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Stock market gains 239 points on further rate cut expectations
KARACHI: The stock market gained 239 points on Tuesday owing to expected lower inflation and possible further rate cut.
The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 32,553 points as against 32,315 points showing an increase of 239 points.
Analysts at Arif Habib Limited said that the market saw rebound of cement sector as the concerns over cement price / bag dissipated.
Upcoming data release on inflation and possible rate cut helped investors take a positive view on equities.
International crude oil prices edged lower, with WTI slipping below US$ 11/bbl that kept pressure on E&P stocks.
PSO, on the other hand, posted price gains during the session.
Banking sector stocks also saw selling pressure due to the view of rate cut.
Cement sector maintained top position in trading volumes with 59.6 million shares, followed by Vanaspati (20.5 million) and Banks (16.8 million).
Among scrips, MLCF led the trading volumes with 36.2 million shares, followed by UNITY (20.5 million) and DGKC (6.6 million).
Sectors contributing to the performance include Cement (+92 points), Power (+45 points), Food (+45 points), Fertilizer (+31 points), O&GMCs (+21 points), Banks (-39 points).
Volumes increased from 122.2 million shares to 159.4 million shares (+29 percent DoD). Average traded value also increased by 10 percent to reach US$ 36.1 million as against US$ 33 million.
Stocks that contributed significantly to the volumes include MLCF, UNITY, DGKC, BOP and HASCOL, which formed 48 percent of total volumes.
Stocks that contributed positively to the index include HUBC (+49 points), ENGRO (+36 points), LUCK (+33 points), NESTLE (+23 points) and PSO (+20 points).
Stocks that contributed negatively include BAFL (-23 points), UBL (-19 points), HBL (-14 points), DAWH (-13 points), and PAKT (-12 points).
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Weekly Review: market likely to stay range bound due to Ramazan
KARACHI: The trading activities in the stock market likely to stay range bound during next week due to commencement of the holy month of Ramazan.
Analysts at Arif Habib Limited said that market to remain range bound in the upcoming week.
With commencement of the month of Ramazan, volumes may dry down. While extension in lockdown by the Federal government to contain the spread of Corona may also build pressure on businesses and keep sentiment at the index lackluster.
The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 6.9x (2020) compared to Asia Pac regional average of 10.2x and while offering DY of around 8.5 percent versus around 3.1 percent offered by the region.
The market commenced on a positive note, continuing the unpreceded rally witnessed on last Friday over SBP’s surprise rate cut of 200bps.
Albeit, the euphoria was short lived with investors parring earlier gains as banks felt the heat of compression in NIMs while oil scrips tanked with international oil prices.
The local bourse displayed a mixed trend for the remainder of the week. Initially leveraged stocks gained traction (cements and steel; amid rate cut and news of potential price hikes) but market participants resorted to profit-taking by week-end as results disappointed.
Whereas sentiment of the banking sector was eroded with the State Bank barring banks from declaring dividends in the March and June quarter of the ongoing year so as to conserve capital.
Albeit, large banks posted gains the following day on clarity regarding disbursement provision in case of board approved dividends for the outgoing quarter. With that said, the KSE-100 closed at 32,806 points (down by 0.08 percent / 25 points WoW).
Sector-wise negative contributions came from i) Oil & gas exploration companies (-48.6 points), ii) Power generation and distribution (-43.8 points), and iii) Commercial banks (-43.5 points).
While positive contributions were led by i) Cement (128.2 points), ii) Fertilizer (63.9 points), and iii) Automobile assemblers (34.0 points).
Foreign offloading during the week arrived at USD 2.5 million compared to a net sell of USD 14.2 million last week. Selling was witnessed in Fertilizer (USD 4.8 million) and Banks (USD 4.1 million).
On the domestic front, major selling was reported by Individuals (USD 11.7 million) and Broker Proprietary (USD 4.7 million). Average Volumes settled at 261 million shares (up by 46.3 percent WoW) while average value traded clocked-in at USD 71 million (up by 88.5 percent WoW).
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Stock market ends down 44 points in narrow range trading
KARACHI: The stock market ended down by 44 points on Friday as market traded in a narrow range on the last day of the week.
The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 32,806 points as against 32,850 points showing a decline of 44 points.
Analysts at Arif Habib Limited said that the market traded in a narrow range on the last day of rollover week.
The benchmark index oscillated between -111 points and +218 points and closed the session -44 points.
Pre-open session saw announcement of financial results of OGDC, LUCK and MLCF as key triggers for the Cement and E&P sectors.
OGDC skipped the dividend payment, which disappointed some investors, but high oil prices still kept the interest alive.
Similarly, MLCF and LUCK posted poorer than expected results, which reflected on the prices of both the stocks earlier in the session, however, stock prices recovered to some extent.
By the close of session, Cement sector stocks closed red, as did Engineering, O&GMCs, Refineries and Fertilizer.
HBL and UBL (among Banks) managed to post some price gains, whereas E&P sector also closed green.
Cement sector realized trading volumes of 30 million shares, followed by O&GMCs (16.9 million) and Power (15.7 million). Among scrips, HASCOL led the table with 14.3 million shares, followed by MLCF (14.2 million) and KAPCO (11.9 million).
Sectors contributing to the performance include E&P (+29 points), Power (+20 points), Technology (+12 points), Tobacco (-27 points), O&GMCs (-26 points), Cement (-22 points) and Inv Banks (-13 points).
Volumes declined from 204.3 million shares to 120.2 million. Average traded value also declined by 48 percent to reach US$ 30.5 million as against US$ 58.8 million.
Stocks that contributed significantly to the volumes include HASCOL, MLCF, KAPCO, UNITY and PPL, which formed 44 percent of total volumes.
Stocks that contributed positively to the index include FFC (+26 points), HUBC (+19 points), SYS (+16 points), UBL (+11 points) and MARI (+11 points).
Stocks that contributed negatively include EFERT (-16 points), PAKT (-16 points), PSO (-15 points), DAWH (-14 points), and PMPK (-11 points).
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Stock market gains 387 points in mixed trading
KARACHI: The stock market gained 387 points on Thursday in mixed trading activities during the day.
The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 32,850 points as against 32,464 points showing an increase of 387 points.
Analysts at Arif Habib Limited said that the market traded range bound for most of the session, with Cement, Banks and Engineering (Steel) sectors facing selling pressure, whereas Oil & gas stocks trading green.
International crude price rebounded overnight for WTI to trade +15 percent from its previous close and helped OGDC, PPL and HASCOL hitting upper circuits.
Sentiment on banking sector turned negative due to SBP’s direction to the Banks to conserve capital by not declaring dividends.
Cement sector, on the other hand, saw profit booking amid poor financial results of some Cement players. Cement sector led the volumes with 70.4 million shares, followed by O&GMCs (28.1 million) and Banks (14.7 million).
Among scrips, MLCF topped the table with 24.5 million shares, followed by HASCOL (21.9 million) and FCCL (12.1 million).
Sectors contributing to the performance include E&P (+265 points), O&GMCs (+74 points), Fertilizer (+65 points), Power (+55 points), Pharma (+24 points), Cement (-96 points) and Banks (-58 points).
Volumes declined from 239.8 million shares to 204.3 million shares (-15 percent DoD). Average traded value also declined by 8 percent to reach SU$ 58.8 million as against US$ 64.2 million.
Stocks that contributed significantly to the volumes include MLCF, HASCOL, FCCL, DGKC and UNITY, which formed 39 percent of total volumes.
Stocks that contributed positively to the index include OGDC (+92 points), PPL (+84 points), POL (+51 points), ENGRO (+45 points) and MARI (+38 points). Stocks that contributed negatively include LUCK (-32 points), MCB (-29 points), DGKC (-23 points), CHCC (-15 points), and KOHC (-14 points).
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Stock market gains 41 points amid negative sentiments
KARACHI: The share market gained 41 points on Wednesday despite negative sentiments prevailed during the day.
The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 32,464 points as against 32,423 points showing an increase of 41 points.
Analysts at Arif Habib Limited said that tumbling international crude prices, especially that of Brent (traded below US$ 16/bbl briefly), caused the damage to investor sentiment today.
Pre-open session saw oil & gas (E&P and OMC) stocks with heavy volumes on offer. Market opened on a negative note and saw a loss of 529 points during the session.
For the most part, the benchmark index traded in the red zone, with sporadic recoveries due to banking sector stocks.
Cement sector continued rallying on the back of expectation of an increase in cement price / bag in the coming days in the Northern region, which would improve the bottomlines of listed Cement companies, in addition to the impact of significantly lower coal prices (hovering around US$ 50/ton).
Financial results of HBL, MCB, ABL brought back some activity, wherein HBL saw selling activity (despite announcement of Dividend), whereas MCB realized some price gains.
Cement sector topped the charts with 95.9 million shares, followed by Technology (22.1 million) and O&GMCs (21.4 million). Among scrips, MLCF saw volumes of 47.7 million, followed by HASCOL (17.4 million) and DGKC (13.8 million).
Sectors contributing to the performance include Cement (+74 points), Banks (+44 points), E&P (-54 points), Inv Banks (-33 points) and Power (-23 points).
Volumes declined from 338.7 million shares to 239.8 million shares (-29 percent DoD). Average traded value also declined by 32 percent to reach US$ 64.2 million as against US$ 93.8 million the other day.
Stocks that contributed significantly to the volumes include MLCF, HASCOL, DGKC, FCCL and HUMNL, which formed 41 percent of total volumes.
Stocks that contributed positively to the index include MCB (+40 points), LUCK (+27 points), BAHL (+16 points), FFC (+14 points) and KAPCO (+13 points).
Stocks that contributed negatively include HBL (-44 points), DAWH (-36 points), HUBC (-34 points), PPL (-29 points), and ENGRO (-22 points).