| GEO Business|
| Stocks flat ahead of fiscal year-end|
| Updated at: 2027 PST, Friday, June 25, 2010|
KARACHI: Pakistani stocks ended flat on Friday in slow trade as investors remained cautious ahead of the fiscal year-end and amid uncertainty over a new capital gains tax (CGT) to be implemented soon.
The Karachi Stock Exchange's (KSE) benchmark 100-share index ended 0.05 percent, or 4.96 points, up at 9,796.85.
Turnover was 89.16 million shares, compared with 80.52 million shares traded a day earlier.
"Trade remained lacklustre for the most part of the day as investors did not want to take much of a risk towards the end of the fiscal year," said Mohammed Sohail, chief executive of Topline Securities, a local brokerage house.
Pakistan's fiscal year runs from July 1 to June 30.
"Also, investors are still awaiting clarity on the (capital gains tax), and until its modalities get clear, both local retailers and institutions would remain cautious," said Sohail.
In its budget for the 2010/11 fiscal year, the government announced that a capital gains tax of 10 percent would be imposed on stocks held for six months or less and 7.5 percent on stocks held between 6 months to a year from July 1.
Dealers said the government had previously agreed with the exchange that the capital gains tax would be levied only on profits made from the start of the 2010/11 fiscal year on July 1.
But now there are concerns the government may seek to tax gains made before that date and demand quarterly tax returns instead of the annual filing preferred by brokers, they said.
Dealers said investors were also waiting for a decision from the Securities and Exchange Commission of Pakistan (SECP) on whether margin buying would be reintroduced to the bourse, which would help increase trade volumes.
The KSE authorities and the regulator met on Tuesday to discuss margin buying and other leveraged products, and decided to form a committee which is required to submit its recommendations within 15 working days, the SECP said.
In the currency market, the rupee ended at 85.31/36 to the dollar, a tad firmer than the previous day's close of 85.33/38, and dealers expected the local unit to stay steady in the near term.
In the money market, overnight rates remained lower at 9.5 percent, and dealers said the affect of outflows of about 37 billion rupees from maturing securities was offset by the central bank's 33.20 billion rupee injection into the interbank market.