Karachi, December 27, 2024 – Financial analysts assert that the recently approved tax bill is unlikely to exert any substantial influence on the stock market, primarily due to the minimal involvement of non-filers in trading activities.
Experts at Chase Securities Limited observed that the Senate ratified the new legislation a day earlier, instituting stringent restrictions on non-filers’ ability to purchase high-value assets such as real estate, automobiles, and shares exceeding specified thresholds.
“Given the negligible participation of non-filers in the equity market, the implications for market performance are limited. However, this legislative measure underscores a significant stride toward fostering a more equitable taxation regime,” the analysts remarked.
Non-tax-paid income has traditionally been funneled into relatively unregulated sectors like real estate. By barring non-filers from acquiring premium real estate, the government aims to promote economic documentation and tax compliance. Over time, this policy could positively affect the stock market by enlarging the pool of eligible investors who participate through formal and tax-compliant channels.
Market Outlook Amid Year-End Consolidation
Meanwhile, the stock market is undergoing a consolidation phase, with year-end profit-taking being a predominant theme. With only three trading sessions remaining before 2024 draws to a close, this period of recalibration is viewed as constructive, enabling investors to reassess their strategies and adjust portfolios accordingly.
Despite the profit-booking trend, the equity market continues to offer compelling valuations. Analysts highlighted that alternative investment avenues, such as real estate, bank deposits, and fixed-income instruments, currently yield lackluster returns. In contrast, certain stocks in the market continue to deliver double-digit dividend yields, making them an attractive proposition for value-focused investors.
Market participants are encouraged to leverage the prevailing consolidation phase to identify undervalued stocks and position themselves strategically for long-term growth. With the upcoming fiscal adjustments and anticipated improvements in economic transparency, the equity market is poised to benefit from enhanced investor confidence and broader participation.
A Positive Signal for Economic Reform
The introduction of this tax bill sends a clear message about the government’s commitment to addressing systemic inefficiencies and strengthening tax compliance. Analysts believe that this is not only a step toward economic formalization but also a move that lays the groundwork for sustainable growth across various sectors, including equities.
Investors are advised to stay vigilant, capitalize on the present opportunities, and prepare for a market landscape that could see gradual yet meaningful structural transformation in the coming years.
