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Pakistan stocks drop steeply as political uncertainty peaks

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  • Market closes at 47,429.82 after losing 956.43 points. 
  • Shares of 343 companies traded during session. 
  • “Correction, after market hit 49,000, is here but will soon subside.” 

KARACHI: The Pakistan Stock Exchange (PSX) on Tuesday witnessed a steep decline after the benchmark KSE-100 fell by nearly 1,000 points as it went through a correction since jumping past the 49,000 mark. 

The market closed the day on a negative note as it shed 956.43 points or 1.98% to settle at 47,429.82 points. 

According to a report by Arif Habib Limited, the 48,000 mark proved to be pivotal and trade below saw downside momentum accelerate. “The correction that we had been anticipating since the market hit 49,000 is here but will soon subside,” it added. 

— PSX
— PSX

However, there are several factors that weighed on the market sentiments including political uncertainty and the ambiguity surrounding the upcoming elections and caretaker set-up. 

Pakistan-Kuwait Investment Company’s Head of Research Samiullah Tariq said that the stocks plunged as political jitters sparked a massive profit-taking spree with investors shedding risky assets in an overbought market amid economic headwinds that are far from losing strength — much less changing course in the near to medium term.

Head of Equities at Intermarket Securities Raza Jafri told Geo.tv that selling was witnessed in profit-taking in state-owned oil explorers which have yet to see an improvement in circular debt. 

“In addition, it is possible that some redemptions may have come through given the KSE-100’s sharp Fiscal Year To Date (FYTD) rise in the backdrop of sustained high inflation. On the whole, it is not surprising to see episodic profit taking came through. Across FY24 however, Pakistan remains an excellent macro trade, with valuations likely to rerate when the interest rate cycle turns,” he added. 

Shares of 343 companies were traded during the session. At the close of trading, 49 scrips closed in the green, 278 in the red, and 16 remained unchanged.

Cynergico PK Limited was the volume leader with 28.31 million shares traded, losing Rs0.33 to close at Rs3.47. It was followed by Oil & Gas Development Company Limited with 27.78 million shares traded, losing Rs7.72 to close at Rs97.85, and K-Electric Limited with 24.68 million shares gaining Rs0.13 to close at Rs2.10.

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Positive IMF negotiations propel KSE-100 Index above 94,000 points

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As a result of investors’ optimism about the reported progress in the continuing talks with the International Monetary Fund (IMF), the Pakistan Stock Exchange (PSX) experienced a robust surge.

The benchmark KSE-100 Index of the PSX, which tracks market sentiment, rose 713 points to a new record high of 94,068 points, breaking above the 94,000-point barrier, as the trading session began.

Early in the day, the stock market began its upward trajectory as the KSE-100 Index steadily rose, gaining 574 points to reach 93,932 points. A possible agreement with the International Monetary Fund (IMF) might lead to more fiscal stability and back Pakistan’s economic reforms, which is why investors are so optimistic about the country’s future.

Officials from the Federal Board of Revenue (FBR) informed the International Monetary Fund (IMF) on Wednesday that the government would not be introducing a mini-budget and would instead continue to aim to collect Rs12,970 billion in taxes each year.

In line with continuing discussions with the Fund, FBR sources revealed that petroleum goods will not be subject to the General Sales Tax (GST).

The fact that Pakistan’s tax-to-GDP ratio has increased from 8.8% to 10.3%, a 1.5% gain viewed as a favorable sign of Pakistan’s fiscal policies, has reportedly pleased the IMF, who has voiced satisfaction at Pakistan’s recent economic performance.

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Provinces must inform IMF team of the postponed legislation for 45% agricultural tax.

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The visiting International Monetary Fund (IMF) delegation is scheduled to meet with provincial government leaders today to examine progress in implementing a tax on agricultural income of up to 45% and discuss the execution of other fiscal policies.

The agricultural income tax was to go into effect on January 1, 2025, after the provincial governments were given until October 31 to pass the necessary legislation. Nevertheless, the deadline was missed by every single province.

Rumor has it that neither Sindh nor Balochistan have moved forward with the tax on agricultural income bill, despite approval from the Punjab government and a draft being developed in Khyber Pakhtunkhwa.

All four provinces have signed the National Fiscal Pact as per the conditions set by the IMF. The reason(s) for the delays will be explained to the IMF delegation.

Federal spending on things like healthcare, social security, and regional infrastructure development is expected to be transferred to the provinces under the IMF agreement, according to sources from the Ministry of Finance. Provincial governments have been singled out by the IMF delegation as key players in tax and economic reform efforts.

Reviewed Here: FBR Excludes Mini-Budget and GST on Petrol from IMF Negotiations

The provincial budget surplus targets will also be briefed to the IMF delegation, according to the sources. The four provinces were supposed to achieve a total surplus of Rs342 billion in the first quarter, but they only managed to manage Rs182 billion. A large portion of the deficit was caused by the Rs160 billion budget deficit in Punjab.

The government’s pledge to retain the annual tax target of Rs12,970 billion was reaffirmed by the Federal Board of Revenue (FBR) on Wednesday, who also confirmed that no mini-budget will be implemented.

In line with continuing discussions with the IMF, FBR sources have also said that petroleum goods will not be subject to the General Sales Tax (GST).

According to sources, the International Monetary Fund has voiced its approval of Pakistan’s recent economic performance, highlighting the country’s improved fiscal policies, which have led to a 1.5% increase in the tax-to-GDP ratio, from 8.8% to 10.3%.

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Petrol prices are expected to experience another increase in Pakistan.

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The inflation-affected nation is expected to encounter another increase in petrol prices, with recommendations indicating a rise of Rs. 2.58 per litre for petrol and Rs. 5.91 per litre for high-speed diesel.

Sources indicate that, if sanctioned, petrol prices will ascend to Rs. 250.96 per litre, whereas high-speed diesel will be priced at Rs. 261.05 per litre.

Sources indicated that the suggested increase is due to the elevated premium on petroleum products in the worldwide market and rising import expenses.

The premium on imported petroleum products has increased, leading the government to contemplate pricing modifications effective November 16, sources indicated.

On October 31, the federal government published the prices of petroleum products for the upcoming fortnight, increasing the prices of petrol and high-speed diesel.

A notification announced an increase in petrol price by Rs 1.35, raising it to Rs 248.38 a litre. The price of high-speed diesel was fixed at Rs 255.14 per litre after an increase of Rs 3.85.

Also read: Pakistan’s weekly inflation jumps to 15.02pc

Simultaneously, the costs of light diesel and kerosene oil were reduced. The statement states that kerosene oil is priced at Rs 148.5 per litre following a reduction of Rs 4.92.

The cost of light fuel was reduced by Rs 2.61 to Rs 147.51 per litre.

The rampant hike in the prices came at the time when the weekly inflation, measured by the Sensitive Price Indicator (SPI), witnessed an increase of 0.28 percent for the combined consumption groups during the week ended on October 17, the Pakistan Bureau of Statistics (PBS) reported.

According to the PBS data, the SPI for the week under review in the above-mentioned group was recorded at 319.79 points as compared to 318.91 points during the past week.

In comparison to the same week last year, the SPI for the combined consumption group during the reviewed week experienced a 15.02 percent increase.

The weekly SPI with the base year 2015-16 =100 covers 17 urban centres and 51 essential items for all expenditure groups.

Likewise, SPI for the lowest consumption group of up to Rs 17,732 witnessed increase of 0.27 percent and went up to 313.74 points from last week’s 312.91 points.

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