No progress on any bailout package for stock market

Earlier, it was reported that PM Abbasi was considering creating a Rs20b fund to help PSX

KARACHI: The government has not worked out any modalities for a bailout package meant to rescue the ailing stock market, confirmed an official on Wednesday.

His statement quashes, for the time being, reports that a Rs20-billion fund with the state-owned asset management company, the National Investment Trust (NIT), was being considered to support the KSE-100 Index that has retreated over 24% in the last five months.

“No such [bailout] package is under consideration in the FBR (Federal Board of Revenue),” FBR spokesman and member Policy Inland Revenue Dr Muhammad Iqbal told The Express Tribune.



The need for a confirmation arose after the KSE-100, which increased over 6% in the week after the initial reports of a bailout, failed to sustain the gain and retreated to its old level of below 40,000.

Rumours also suggested that there would be no bailout and fund creation was a strategy sold to the public by market players to sell and exit.

However, on Wednesday, value picking meant the benchmark recovered 2.11%.

Background

A delegation of some 25 PSX officials and brokers had recommended Prime Minister Abbasi at the Governor House in Karachi to constitute a fund worth Rs20 billion to be injected into the market in mid-October.

In addition, they had suggested reduction in the rate of taxes on shares, including capital gains tax, tax on bonus shares and on brokers.

Prior to the meeting, the index had dropped 25% in the last four-and-a-half months to 39,846.78 points on October 13 from its all-time high of 52,876.46 on May 24.

After the meeting, it was reported that Abbasi had assured to consider the suggestions and revival plan would be made for the PSX.

However, half a month on, there is no word or progress on the meeting, confirmed the FBR official.

The FBR is the institution that deals with matters related to such packages from all ministries before issuing a policy note on it.

Progress on bailout

A source close to the developments, quoting a highly-ranked NIT official, said the government has so far held no communication with the asset management company for the formation and /or management of the Rs20 billion fund.

The source also quoted a top broker who told him that (almost) no development has taken place in the case of recommendations brokers gave to PM Abbasi.



Another seasoned broker said the government was busy in politics, and authorities have found no time to pay heed to their recommendations for market revival.

“How can the government pay attention to economic and business matters when finance minister, Ishaq Dar, has remained full-time engaged in rescuing himself from corruption cases”.

The broker, however, said there was still some hope and once the government manages to settle the political dust it would revert to economic management and find ways for market revival as well.

Published in The Express Tribune, November 2^nd, 2017.

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