KARACHI: With respect to capital markets, overall tone of the Federal Budget for fiscal year 2017-18 (FY18) appears to be negative though analysts believe the budget announcement is simply very much an extension of China Pakistan Economic Corridor (CPEC) project. The measures for the capital markets announced in the budget speech by the Finance Minister appeared to be largely negative for the capital market- the Pakistan Stock Exchange (PSX). “We believe the budget will test market resilience with more negatives (bourse & sector specific) than positives, when market resumes trading on Monday. However, value buying can be expected later specifically in MSCI stocks ahead of Pakistan’s inclusion in MSCI Emerging Markets on June 1, 2017”, said JS Research’s analyst. Sector specifically, we do not believe any sector as such stands out. However, we can see interest in stocks like PSO because of potentially higher cash payout and IT-related companies due to tax incentives, he added. “We expect investors with holding period of more than twelve months but shares acquired after July 1, 2013 to mark to market their gains before July 1, 2017 to avail the benefit of lower tax rate”. The tax on dividends has been, cascading Capital Gain Tax (CGT) regime has been eliminated, and taxes on payouts of mutual funds have increased, extension in super tax higher turnover tax. That said, continued focus on infrastructure upgradation is expected to keep growth trajectory intact in the medium term, said an analyst. To simplify the CGT regime, the government has replaced the CGT structure with the flat rate of 15 percent for filers and 20 percent for non-filers. Previously there was a unique structure which comprises various brackets and varied tax rates ranging from 7.5 percent to 18 percent.