Bloodbath on PSX, index tumbles 1,665 points.
KARACHI -- Panic selling ensued on the shares market as soon as the government announced on Friday it'll subject large-scale businesses to a 10 per cent 'super tax' for bridging its fiscal gap.
The benchmark index plummeted 2,161 points immediately as investors rushed to liquidate their investments in anticipation of lower corporate earnings and the subsequent fall in share prices.
According to Ahsan Mehanti of Arif Habib Corporation, a falling rupee and the likely interest rate hike also played the role of a catalyst in the bearish close.
The KSE-100 index settled at 41,051.79 points, down 1,665.18 points or 3.9pc from a day ago. The benchmark recorded its 11th worst single-day decline ever, according to data compiled by Ismail Iqbal Securities.
The trading volume increased 21.4pc to 424.2 million shares while the traded value went up 26.3pc to $61.7m on a day-on-day basis.
The government will collect the new tax on corporate earnings for 2021-22 from companies that have annual profits of more than Rs300m each and belong to 13 sectors. These sectors are sugar, cement, steel, textile, tobacco, fertiliser, banking, oil and gas, beverage, automobile, airline, chemical and LNG terminal. Many of these sectors are index heavyweights, which means their constituents have a disproportionately high representation in the main benchmark of the bourse.
'Although this move will affect companies' profits for the current year, we believe the valuations are still attractive. After this measure, the market is trading at a price-to-earnings multiple of 4-5. We think the currency and macro stability after the IMF (programme resumption) will provide the much-needed support to the local bourse,' said Topline Securities in a note to its clients.
The effective tax rate for companies belonging to these...
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