Stocks surged in Pakistan on Tuesday, with the Pakistan Stock Exchange’s (PSX) benchmark KSE-100 index crossing the 81,000-point mark during intraday trade. The index rose by 483.98 points, or 0.6%, to touch 81,050.18 points at 11:40am but settled at 80,672.06 points, registering a modest gain of 106 points, or 0.13%, by the end of the trading session.
This upward momentum was driven by local and foreign buying amid strong institutional support. However, a late profit-selling spree curtailed the rally. Analyst Ahsan Mehanti from Arif Habib Corp explained to Geo.tv that the surge to an all-time high was fueled by investor optimism surrounding the potential privatization of state-owned enterprises (SOEs). Prime Minister Shehbaz Sharif’s assurance of holding the Pakistan International Airlines (PIA) bidding process in August played a significant role in boosting investor confidence.
Additionally, Mehanti pointed out that the rupee’s recovery against the dollar and investor hopes for a new International Monetary Fund (IMF) deal contributed to the market’s performance. The State Bank of Pakistan’s (SBP) accommodative policy rates also played a catalyst role in the bullish activity at the PSX.
Khurram Schehzad, CEO of Alpha Beta Core and an economic analyst, noted that the anticipation of upcoming IMF talks for a new, larger, and longer program has bolstered investor confidence in economic reforms and greater stability in the economy. He remarked that the market remains inexpensive on multiples, encouraging investors to increase their exposures.
This positive trend follows a similar pattern observed a day earlier, when stocks recorded an increase of 353.41 points, or 0.44%, closing at 80,566.21 points. The continuous gains indicate a growing investor confidence in the market’s potential for future growth.
The potential privatization of SOEs, such as PIA, is seen as a crucial step towards economic reform and financial stability. Investors are closely monitoring the government’s actions and statements regarding these developments. The commitment to privatization is expected to attract more investments and improve the overall performance of the stock market.
The recovery of the rupee against the dollar has also provided a favorable environment for investors. A stronger local currency reduces the cost of imports and inflationary pressures, contributing to a more stable economic outlook. This stability, combined with the possibility of a new IMF deal, has created a positive sentiment among market participants.
The SBP’s easy policy rates have further supported the bullish activity in the market. Lower interest rates make borrowing cheaper, encouraging businesses to invest and expand. This, in turn, stimulates economic growth and boosts investor confidence.
As the market looks forward to the IMF talks, there is a sense of optimism regarding the potential for economic reforms and stability. The prospect of a larger and longer program with the IMF is expected to provide the necessary support for Pakistan’s economy, addressing key challenges and ensuring sustainable growth.
The PSX’s benchmark KSE-100 index saw a significant surge on Tuesday, driven by local and foreign buying, institutional support, and positive economic indicators. The anticipation of SOE privatization, the rupee’s recovery, and hopes for a new IMF deal have all contributed to the market’s performance. As investors continue to monitor these developments, the market remains poised for potential growth and stability in the coming months.
