Equities turn bullish as ‘positive’ budget sparks value hunting

A status quo in capital gains tax (CGT) and dividend rates increased equity investor optimism, as the overall thrust of the federal budget remains on fiscal consolidation, which sparked renewed buying interest across the board, propelling the benchmark KSE 100 index to an all-time high in the outgoing week. However, the market came under pressure by the end of the week on news of the 50pc tariff on steel by the US on its trading partners and an attack by Israel on Iran in which senior military personnel lost their lives, increasing tension in the Middle East. The market opened the week on a positive note, with momentum strengthening after the announcement of a stock market-friendly federal budget FY26. Contrary to expectations, according to Arif Habib Ltd (AHL), there was no hike in CGT or dividend taxes. In contrast, a proposed increase in tax on interest income made equities a more attractive asset class.