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FINANCIAL CHRONICLE™ » FINANCIAL CHRONICLE™ » Market should fall 648 Points as a result of Super Gain Tax

Market should fall 648 Points as a result of Super Gain Tax

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Quibit


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
What would be final effect on the Market cap. I have calculated below.

Super Gain Tax =LKR 27bn
Market PER= 20 PER
Impact to Market Capitalisation:
LKR 27Bn X 20 PER
LKR 540 billion

You can also calculate the expected fall:
Current market cap =  LKR 3,000 Billion
Impact: LKR 540 Billion
% Impact = 540/3000
18%

Market should fall By 18%
Current Market ASI : 7200
Expected Fall: 1296 Points
Final ASI after adjustment : 6000

If we take a market PER of 10, then the market should fall 648 Points (ASI 6728) as a result of this tax.

(This is a theoretical calculation and therefore please do not find fault with me if it does not fall to 6000)

Nitro 7


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Market won't fall like that for one time costs.

Also these companies will change the spending on their dicsretionary costs for next year. That will more or less make very limited impact in medium term.

Also with the other initiatives, the Country will grow and in medium to long term be benefitting these Companies.

So grab the opportunity at these levels..

mendis86


Manager - Equity Analytics
Manager - Equity Analytics
good claculation

sharemarket

sharemarket
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@Nitro 7 wrote:Market won't fall like that for one time costs.

Also these companies will change the spending on their dicsretionary costs for next year. That will more or less make very limited impact in medium term.

Also with the other initiatives, the Country will grow and in medium to long term be benefitting these Companies.

So grab the opportunity at these levels..

Don,t buy any share these levels ,market will down further...further...till end of these Buffaloes danceings....Mad  Embarassed Evil or Very Mad Twisted Evil

anjelo

anjelo
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
quibit is on the negative minded............ mood swinger :-)

Nitro 7


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Yes we need to be symphatetic towards Bi-Polar people. They say things like this expecting attention..

What a joke Very Happy

@anjelo wrote:quibit is on the negative minded............ mood swinger :-)

Quibit


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
So far it has fallen only 200 points. Long way to go.

Market should fall 648 Points as a result of Super Gain Tax Screen25

sharemarket

sharemarket
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
[quote="anjelo"]quibit is on the negative minded............ mood swinger :-)

At negative time ,be negative...In share market,other wise you will looser..

sureshot

sureshot
Vice President - Equity Analytics
Vice President - Equity Analytics
@Quibit wrote:What would be final effect on the Market cap. I have calculated below.

Super Gain Tax =LKR 27bn
Market PER= 20 PER
Impact to Market Capitalisation:
LKR 27Bn X 20 PER
LKR 540 billion

You can also calculate the expected fall:
Current market cap =  LKR 3,000 Billion
Impact: LKR 540 Billion
% Impact = 540/3000
18%

Market should fall By 18%
Current Market ASI : 7200
Expected Fall: 1296 Points
Final ASI after adjustment : 6000

If we take a market PER of 10, then the market should fall 648 Points (ASI 6728) as a result of this tax.

(This is a theoretical calculation and therefore please do not find fault with me if it does not fall to 6000)

may your day dream come ture

sharemarket

sharemarket
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@sureshot wrote:
@Quibit wrote:What would be final effect on the Market cap. I have calculated below.

Super Gain Tax =LKR 27bn
Market PER= 20 PER
Impact to Market Capitalisation:
LKR 27Bn X 20 PER
LKR 540 billion

You can also calculate the expected fall:
Current market cap =  LKR 3,000 Billion
Impact: LKR 540 Billion
% Impact = 540/3000
18%

Market should fall By 18%
Current Market ASI : 7200
Expected Fall: 1296 Points
Final ASI after adjustment : 6000

If we take a market PER of 10, then the market should fall 648 Points (ASI 6728) as a result of this tax.

(This is a theoretical calculation and therefore please do not find fault with me if it does not fall to 6000)

may your day dream come ture  

Next month you won,t dance..sureshot. Laughing

mendis86


Manager - Equity Analytics
Manager - Equity Analytics
how say unp govement good for economy

Vptilak


Manager - Equity Analytics
Manager - Equity Analytics
@anjelo wrote:quibit is on the negative minded............ mood swinger :-)

of cause.

aran

aran
Manager - Equity Analytics
Manager - Equity Analytics
@Quibit wrote:What would be final effect on the Market cap. I have calculated below.

Super Gain Tax =LKR 27bn
Market PER= 20 PER
Impact to Market Capitalisation:
LKR 27Bn X 20 PER
LKR 540 billion

You can also calculate the expected fall:
Current market cap =  LKR 3,000 Billion
Impact: LKR 540 Billion
% Impact = 540/3000
18%

Market should fall By 18%
Current Market ASI : 7200
Expected Fall: 1296 Points
Final ASI after adjustment : 6000

If we take a market PER of 10, then the market should fall 648 Points (ASI 6728) as a result of this tax.

(This is a theoretical calculation and therefore please do not find fault with me if it does not fall to 6000)

send this calculation to oxford they will award u great titles like master of stock market lol! lol!

Quibit


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Market has already reacted to the news and there would many more pundits who will predict this fall. Lets read papers tomorrow.

soileconomy

soileconomy
Vice President - Equity Analytics
Vice President - Equity Analytics
Bad thing is big corporates will have to compensate most unproductive government servants.

Spoon

Spoon
Senior Equity Analytic
Senior Equity Analytic
You have failed to indicate the many assumptions you've made for this calculation

1) You assume the market cap or weightage assigned for each company to derive the ASPI is equal for every company and that every company will be equally affected. = This is because you have applied 18% on the ASPI instead of the ASPI's components.

2) You assume that the every company is subject to the effects of the super gains tax. = This is because you have applied 18% on the ASPI instead of the ASPI's components.

3) You assume all industry PERs average to 20 (or 10). Using an average with high statistical outliers will produce unreliable results. = This is because you use a PER of 20 (or 10) in your calculations.

4) You fail to take account of the one-time tax policy reasoning.

5) You do not factor in the ability of companies to increase their leverage in order to pay lower tax amounts (as the tax is bottom line based and not top line based).

6) You assume prices will reduce proportionately to earnings. This is because you multiply the tax amount by the PER to calculate the loss in market capitalization.

I hope you don't see this as me criticizing your formula. It's almost impossible to factor in the assumptions that you've made.

I do however believe, it is important that you MENTION these assumptions before attempting to scare the entire forum.

And with that, PLEASE INVEST ON VALUE AND NOT SPECULATIVELY.

Quibit


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Spoon, Thanks for detailing my assumptions, which I should have done.

I am aware it is one off tax. But since my share valuations are done on PER basis with FY 2015 Forward earning, full affect of Super Tax would be felt immediately. But I do agree it will not have the same affect in FY 2016. But 2016 has many other variable that one wouldn't forsee now.

Spoon

Spoon
Senior Equity Analytic
Senior Equity Analytic
@Quibit wrote:Spoon, Thanks for detailing my assumptions, which I should have done.

I am aware it is one off tax. But since my share valuations are done on PER basis with FY 2015 Forward earning, full affect of Super Tax would be felt immediately. But I do agree it will not have the same affect in FY 2016. But 2016 has many other variable that one wouldn't forsee now.

Completely understandable. It's almost impossible to factor in the assumptions that you've made into the calculation without using probabilities that would produce several ASPI numerics and, in my opinion, erode the usability and simplicity of your prediction.

mendis86


Manager - Equity Analytics
Manager - Equity Analytics
dont calculate anytine u can see the drop aftar 2 weeks

Gainer

Gainer
Associate Director - Equity Analytics
Associate Director - Equity Analytics
Good news possible and highly expecting they will remove the super gain tax after the today market fall.

From monday bull is ready.

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