Capital markets unmoved

Updated June 12, 2019

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The budget 2019-20 on the whole was defined by most market participants as “neutral to negative”. — AFP/File
The budget 2019-20 on the whole was defined by most market participants as “neutral to negative”. — AFP/File

KARACHI: The budget 2019-20 on the whole was defined by most market participants as “neutral to negative”. Following the first readings of the document, brokers and analysts categorised the budget as “negative” for cement, steels, automobiles, independent power producers (IPP) and textile sectors. However, for fertiliser and heavyweight banking, the budget appeared on the face of it to be “neutral”.

Topline Securities CEO Mohammad Sohail observed that the budgetary measures would help increase revenue and bring about discipline and stabilisation as advised by the International Monetary Fund.

Arif Habib Ltd’s Investment Research VP Tahir Abbas commented that the budget has tightened the noose around the property sector as all transactions would have to be routed through the bank, along with the levy of Capital Gains Tax (CGT).

Most brokers, analysts and fund managers were sour over the corporate tax rate which was kept unchanged at 29pc for two years, breaking the earlier commitment of reduction by 1pc each year.

But by and large, most participants conceded that the budget did not take the investors by surprise since most of the proposals were already known and priced into the equity values.

Published in Dawn, June 12th, 2019