Stocks sink as super tax spurs mass exodus

KARACHI: Stocks nosedived on Friday after the government announced an extra 10 percent super tax on select sectors for one year, which spurred a mass exodus, the largest single-day decline in six months, traders said.

Pakistan Stock Exchange's (PSX) benchmark KSE-100 Shares Index plunged 1,665.18 points or 3.9 percent to 41,051.79 points after swinging between a high and low of 42,782.12 and 40,540.58 points, respectively.

Ahsan Mehanti at Arif Habib Corp said panic selling prevailed after the announcement of super tax, while falling rupee and likely SBP policy impact of IMF monetary targets also weighed heavy.

The KSE-30 Shares Index also decreased by 690.77 points or 4.22 percent to 15,662.45 points.

Traded shares increased by 76 million to 424.229 million from 349.488 million shares. The trading value rose to Rs12.806 billion from Rs10.136 billion. Market capital, however, dropped to Rs6.862 trillion from Rs7.093 trillion. Turnover in the futures contracts increased to 252.575 million shares from 216.535 million shares.

Out of 364 companies active in the session, 61 closed in the green, 287 in the red, while 16 remained unchanged.

Topline Securities said the index opened on a lacklustre note, however, succumbed to panic selling owing to imposition of super tax on FY22 earnings on specified sectors.

The UBL, HUBC, ENGRO, MCB, and LUCK knocked 423 points out of the index.

The highest increase was recorded in shares of Mehmood Textiles, which rose by Rs60.48 to Rs866.96 per share, followed by Philip Morris Pakistan, which increased by Rs23 to Rs563 per share.

A major decline was noted in shares of Nestle Pakistan, which fell by Rs200.08 to Rs5,700 per share, followed by Bata (Pak), which decreased by Rs162.17 to Rs2,004.66 per share.

Arif Habib Ltd reported that it was a bloodbath. “The benchmark KSE-100 index stumbled to 2161 points. Volumes remained healthy while selling pressure was witnessed across the board,” the brokerage said.

The major losing sectors were banks (-404.9 points), E&P (-220.1 points), fertiliser (-205.0 points), cement (-192.7 points), and power (-108.2 points).

JS Research said the index partially recovered towards the end of the trading session otherwise the losses could have been even worse. “Going forward, we recommend investors to remain cautious at current levels and wait for any fresh buying,” the brokerage advised.

The government on Friday imposed an extra one-time 10 percent tax on large-scale industry for one year to raise over Rs400 billion to clinch a crucial deal from the International Monetary Fund (IMF).

The announcement comes ahead of what Pakistan hopes will be an agreement to unlock a new tranche of IMF funds which are needed to avert a balance of payment crisis.

“Let me share this good news that this country isn’t heading toward a default anymore,” the finance minister told parliament in his concluding budget speech that brought in the new taxes.

“We’ve taken very difficult decisions,” he said.

Ismail called it a super tax, pleading with large scale industry to bear with it for just one year to help shore up revenues urgently required to cut the fiscal deficit.

K-Electric Ltd was the volume leader with 36.666 million shares. It closed higher by one paisa to Rs2.86 per share. It was followed by Cnergyico PK with 25.853 million shares.

The refiner decreased by 43 paisas to Rs5.35 per share.

Other turnover-makers included Pakistan Refinery, Telecard Limited, Unity Foods Ltd, Flying Cement, WorldCall Telecom, Hum Network, TPL Properties and Ghani Global Holding.