The market has collapsed. The KSE-100 Index plummeted over 2,000 points in less than 20 minutes between 11:40 and noon on Friday. This about sums up the market reaction after Prime Minister Shehbaz Sharif held his press conference, announcing a massive super tax or poverty alleviation tax on large industries in his “bid to relieve the general public of tax pressures”.
PM Shehbaz slaps 10% super tax on large industries
Sectors on which the super tax has been imposed include cement, steel, sugar, oil and gas, fertilizer, LNG terminal, textile, banks, automobile, tobacco, beverages and chemicals. Since most of these sectors are part of the listed companies on the PSX, investors hurriedly rushed to sell their holding, in a bid to conserve their capital.
At the mid-break, the KSE-100 was placed at 40,661.59, with a massive fall of 2,055.38 points or 4.81%. Trading will resume following the break for Friday prayers.
“The market is reacting to PM Shehbaz’s announcement on the imposition of super tax on the industries,” Sana Tawfik, vice president of research and a senior analyst at Arif Habib Limited (AHL), told Business Recorder.
She said investors are waiting for clarity on whether the super tax imposed is flat or in slabs, adding that markets could remain negative, with a circuit breaker being imposed.
The analyst, however, remained optimistic as there are a number of positive developments in the offing.
“The International Monetary Fund (IMF) program could be revived in the coming days, and $ 2.3 billion inflows from China are also expected shortly, which would revive confidence in the market.
“The current account deficit figures will also impact market sentiment,” she added.
On Thursday, the benchmark KSE-100 Index had closed 0.61% higher, at 42,716.97, with a gain of 258.83 points.
This was in part due to Pakistan finalizing its $ 2.3-billion facility agreement with China, news that Rs133 billion had been appointed for IPPs by the Economic Coordination Committee of the cabinet, plus appreciation of the rupee against the US dollar.
This is a developing story