Karachi, February 17, 2023 (PPI-OT): Bears return – KSE100 sheds 1.5%

In a turnabout from previous trend, market closed negative this week, losing a total of 623 points. This was despite the government taking steps toward pending reforms like higher taxation measures and rationalization of energy tariffs for the completion of the IMF review. Talks over the 9th review have entered final stages and staff level meetings were held during the week. During the week, ECC approved increase in gas prices from 10% – 69% for various segments other than residential. A number of manufacturing sectors would bear negative impact on earnings, assuming ability of passing on the impact to end consumers would be limited.

Finance Minister announced Supplementary budget FY23 in the parliament on Wednesday whereby Rs170bn worth of incremental taxes were imposed. Increase in GST by 1% was proposed whereas, FED on Cement, Cigarettes, Fruits and juices etc. was also proposed to be increased. Moreover, additional taxes on luxury items and first class travel were also proposed. During the week, SBP held a PIB auction in which all bids were rejected. SBP FX reserves witnessed a slight increase this time taking the total to a little over US$3bn. The week witnessed appreciation of PKR against USD, closing 2.5% WoW higher (+Rs6.5) at Rs262.8/US$.