In a historic milestone for Pakistan’s financial markets, the Pakistan Stock Exchange (PSX) witnessed an unprecedented boom as the benchmark KSE-100 index crossed the monumental threshold of 75,000 points.
Investors rejoiced as the index surged by an impressive 563 points, reaching an impressive level of 75,094 points during trading sessions.
The remarkable rally in the PSX began at the opening bell on Wednesday, with the index showing resilience and strength amidst economic fluctuations. The day commenced with a surge of 307 points in the KSE-100 index, igniting optimism among traders as the index traded at 74,839 points.
Market analysts attributed this surge to a myriad of factors, including positive economic indicators, robust corporate earnings, and favorable government policies aimed at fostering investment and growth. The buoyant sentiment among investors reflects growing confidence in Pakistan’s economic trajectory and its potential for sustained development.
Tuesday marked another significant milestone as the PSX closed at an all-time high on the second day of the business week, further solidifying its position in the country’s financial landscape. The PSX recorded a staggering increase of 732 points, with the benchmark KSE-100 index reaching an unprecedented level of 74,531 points at the close of business. This surge underscores the resilience of Pakistan’s economy amidst global uncertainties and challenges.
These positive developments in the stock market unfold as Pakistan engages in negotiations with the International Monetary Fund (IMF) for a larger, long-term loan agreement. As talks between Pakistan and the IMF intensify, the Fund has advocated for significant changes in the country’s tax regime.
Sources familiar with the negotiations reveal that the IMF has proposed ending tax exemptions, incentives, and privileges, with a particular emphasis on increasing taxes on privileged sectors. Among the proposals put forward are increases in taxes on luxury plots and cars, as well as imposing taxes on the property sector. Specific measures include imposing higher taxes on plots valued at over Rs50 million and abolishing tax exemptions on capital gains from the sale of residential property.
Moreover, the IMF supports changes in tax slabs for the salaried class, advocating for a hike in taxes on income ranging from Rs300,000 to Rs500,000. The Fund has also suggested raising the withholding tax on new vehicle purchases, particularly on luxury car imports.
In tandem with the stock market surge, Pakistan’s macroeconomic conditions have shown improvement during the first half of Fiscal Year 2024, according to the State of Pakistan’s Economy Report released by the State Bank of Pakistan (SBP) on Tuesday. The report highlights moderate recovery in real economic activities, aided by a Stand-By Arrangement (SBA) with the IMF, which helped alleviate stress on external accounts. Additionally, the report notes a considerable narrowing of the current account deficit, attributed to contractionary monetary and fiscal policies, improved agricultural produce, and eased global commodity prices.
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