Stocks drop steeply as IMF deal in the doldrums
Business
Stocks drop steeply as IMF deal in the doldrums
KARACHI (Web Desk) - Shares at the Pakistan Stock Exchange dipped on Wednesday, with analysts attributing the bearish sentiment to a “disappointing” budget besides zero progress on a Staff Level Agreement with the International Monetary Fund (IMF).
The programme deadline is going to be over on June 30.
The benchmark KSE-100 index closed at 40,220.79, down 418 points or 1.06 per cent.
Salman Naqvi, head of research at Aba Ali Habib Securities, observed the federal budget for fiscal year 2023-24 proposed a host of taxes that demotivated investors.
He discussed various taxes including an “across-the-board super tax” on industry, a 10pc tax on bonus shares and a 50pc tax on “abnormal profits” as disheartening.
He said the market was performing quite well prior to the budget and “lack of incentives for the economy” in the budget hit the stocks hard.
Naqvi commented less than 10 days were left before Pakistan’s Extended Fund Facility (EFF) with the IMF expires (on June 30) but no agreement had yet been signed. He said the IMF deal was of extreme importance for Pakistan and there were fears of a default without it.
As there was no word on the agreement yet, he said, investors were opting for a wait-and-see approach. Stocks fell across the board as investors weigh Pakistan’s dollar-denominated bond yields, which have risen to 119.5pc for securities maturing in April 2024, indicating that default risk was mounting.
