Initial market response to the mini budget will be mildly positive

After a few delays, the government finally presented the Mini Budget in the Parliament, the approval of which will fulfil one of the two IMF pre-conditions for resumption of the EFF Program (the other condition being amendments in the SBP Act for greater central bank autonomy).

The proposed measures in the Budget will remove tax exemptions and temper hitherto concessionary rates (such as sales tax of less than the standard 17%) on various items, which include imported food, plant and machinery, agricultural inputs, medical supplies and automobiles.

We think the initial market response to the Mini Budget will be mildly positive, were apart for the Auto OEMs, and it is broadly neutral for other sectors.

We highlight that the market is trading close to multiyear trough levels (forward P/E of c.4.8x).

Courtesy – Intermarket Securities Limited.

Sharing is caring

Leave a Reply