Friday, April 26 2024

Stocks falter on institutional profit-taking
After scaling a historic peak the previous day, the stock market on Thursday came under selling pressure as investors indulged in profit-taking, dragging the index below the 72,000 level. Ahsan Mehanti of Arif Habib Corporation said institutional profit-taking in selected overbought scrips and adjustments in the earning season stalled the overnight rally. He added that the weak rupee and structural reforms for the new IMF programme are likely to withdraw subsidies in the energy, fertiliser, and gas sectors, and expectations over the status quo in the SBP policy announcement next week depressed market sentiments. According to Topline Securities Ltd, sectors such as oil and gas exploration, auto, banking, cement, and fertiliser contributed to the index’s decline, with companies like Millat Tractors Ltd, Pakistan Oilfield Ltd, Lucky Cement, Faysal Bank Ltd, and Engro Corporation wiped out 206 points.
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IT firm under FBR scrutiny
The Federal Board of Revenue (FBR) has served an income tax audit notice to an information technology company on suspicion of evading taxes by claiming higher expenses and understating imports amid the government’s increased focus on plugging revenue leakages. The FBR has requested records and books of accounts from M/s Pronet Private Limited under Section 177 of the Income Tax Ordinance, suspecting tax evasion during the tax year 2023, according to senior FBR officials. They stated that the company’s books need scrutiny after tax authorities found glaring inconsistencies in income tax returns filed over the past seven years. The company’s records were obtained through intervention from the FBR headquarters, as it emerged that the Karachi field tax office was aiding tax evasion. Sources revealed that the field office dealt with tax notices regarding short deductions of millions of rupees in withholding taxes, settling at a few hundred thousand for tax years 2016 to 2022. These notices were quietly settled in 2022.
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RDA inflows at 19-month high
The foreign currency investment made by overseas Pakistanis through the Roshan Digital Account (RDA) reached a 19-month high at $182 million in March 2024, which indicated an increase in confidence of expatriate Pakistanis in the national economy. According to the State Bank of Pakistan’s (SBP) data, the inflows increased by 29% to $182 million as compared to the investment of $141 million in February 2024. With the fresh injection, total gross inflows have surged to a new high of $7.66 billion over a period of 43 months as the investment scheme for the expatriates was launched in September 2020. Net inflows, however, settled at $1.28 billion in March after accountholders mostly utilised the investment in Pakistan or withdrew some of the funds in line with their requirements. RDA inflows have helped stabilise Pakistan’s foreign exchange reserves around $8 billion. Talking to The Express Tribune, Ismail Iqbal Securities Deputy Head of Research Saad Hanif said “this is an encouraging monthly inflow ($182 million), the highest since August 2022.”
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WB urges bold fiscal reforms for debt crisis
World Bank’s (WB) Global Director for Governance, Arturo Herrera Gutierrez, on Thursday stressed the need for ‘bold’ fiscal reforms to address Pakistan’s debt distress and achieve macroeconomic stability. Speaking at a lecture organised by the Pakistan Institute of Development Economics (PIDE), Gutierrez highlighted the urgency of sustainable fiscal reforms, drawing from international experiences. “Pakistan stands at a crucial juncture where it can either pave the path for sustained economic growth or fall into the recurring traps of debt distress,” he remarked. Gutierrez discussed historical economic challenges faced by countries like Mexico in the 1980s and how these experiences shape fiscal strategies today. Additionally, he emphasised that ensuring fiscal sustainability required a comprehensive long-term strategy, not just balancing budgets annually.
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Rupee depreciates to 5-week low
Pakistani currency on Thursday hit a five-week low at Rs278.48 against the US dollar in the inter-bank market, maintaining its downward trend over the past one month amid speculation about lower supply of the foreign currency and an uptick in its demand in the market. According to the State Bank of Pakistan’s (SBP) data, the rupee shrank 0.03%, or Rs0.09, and closed at Rs278.48 against the greenback. It has cumulatively dropped 0.52%, or Rs1.45, in the past one month as compared to the five-and-a-half-month high close of Rs277.03/$ reached in the last week of March 2024. The downtrend indicates that foreign currency demand for import payments has remained higher than its supply. Recent trade data showed that Pakistan’s imports were gradually increasing, generating more demand for dollars in the banking system.
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