The much-awaited relaxation on Capital Gain Tax (CGT) was not mentioned in the Finance Bill presented in the National Assembly on Friday as a part of the Federal Budget FY11-12. "After the recent round of meetings with Ministry of Finance and FBR, it was expected that CGT may be deferred at least for the individual investors, who have been deserting the market causing volumes in FY11 to decline to 8-year low of Rs 4 billion a day down 50 per cent from last year," Muhammad Sohail, leading analyst and CEO of Topline Securities said.
He said this would not only affect the market depth and volumes but would have adverse implications for the government plan to privatise its units through the stock market. The trend of IPO that slowed down last year with only one offering (versus 10 IPOs a year on an average) would remain affected thereby having impact on the capital formation, he added.
"We expect the market will react negatively on Monday by 100-200 points unless some confidence building comments in this regard is made by Finance Ministry officials in the post budget press conference," he said. Pakistan's once vibrant and actively traded Karachi bourse that used to trade Rs 40 billion a day in cash (Rs 28 billion) and single stock futures (Rs 12 billion) on an average is on the verge of losing its once famous slogan of most liquid market of Asia and the government has totally ignored this market once again.
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