Pakistan's new financial year, which begins on Saturday, offers the prospects of a strong performance for stocks with a stake in construction business, following the government's decision to raise development spending sharply in the coming year.
Analysts believe Pakistan's success in seeking international promises for support worth $6 billion to back reconstruction following last October's devastating earthquake, may also boost the construction sector, says a Financial Times report.
According to the report, the new financial year follows 12 months of intense activity across the Karachi Stock Exchange (KSE), during which its representative KSE-100 index set historical records before its recent retreat in the wake of concerns over new taxes for the stock market, and the fallout from global trends across international markets.
However, leading analysts still believe the index could end the financial year up to 40 percent higher than in July 2005.
The government's decision to raise spending on the Public Sector Development Programme (PSDP) by almost 52 percent to Rs 415 billion ($6.9 billion) is meant to step up the pace of infrastructure development in the country, the report added. Stocks of companies producing cement, steel and other construction materials are likely to benefit. Companies dealing with energy are also set to gain from higher sales. The net result of higher development-related spending is bound to perk up sentiment on the stock market, leading analysts say.