Bulls run continued at the Pakistan Stock Exchange (PSX) on Wednesday, as the benchmark KSE-100 Index briefly soared past the psychological barrier of the 64,000 mark.
The upward trajectory was backed by economic revival initiatives, improved indicators, high investor confidence, and expected inflows in the form of a second tranche from the International Monetary Fund (IMF).
The PSX website reported that the KSE-100 index closed at 63,917.72 points, an increase of 961.70 points from the previous closing of 62,956.02.
At 3:15 pm, the benchmark index touched the 64,038.83 level before falling back.
The recent market sentiment is boosted by a recent staff-level agreement between Pakistan and the IMF on the first review under the $3 billion Stand-By Arrangement (SBA). The agreement paved the way for releasing the second tranche of $700 million to Pakistan in mid-December.
According to the latest report by the Ministry of Finance, the PSX is experiencing a bullish wave due to a favourable IMF review and a consistent monetary policy stance.
The report, titled “Monthly Economic Update and Outlook for November” stated that “Pakistan’s economy is on a gradual but promising path to recovery.” The report also observed that the economic activity is increasing due to the pace of economic revival initiatives.
The investors were also encouraged by the improvement in the country’s financial indicators, such as the extension of $3 billion deposit by Saudi Arabia, the expected $2 billion inflow from the World Bank in FY24, the above-target tax collection by the Federal Board of Revenue (FBR), and the relatively stable rupee.
The market experts believe that the interest rates have peaked and are likely to decline from 2024, which would attract more flows to the equity market. They also expect the corporate earnings to improve in the coming quarters, reflecting the economic recovery.
The PSX has seen a phenomenal rise of nearly 17% and the highest foreign investment in six years of $34.5 million in November 2023, indicating the strong confidence of investors in the country’s economic revival.
This was the second-highest monthly return in percentage terms in over a decade, only behind the Covid’s abnormal return in April 2020.
The surge in Pakistan’s stock market rally has been a pivotal factor in the 50 percent increase in the benchmark index since late June, making it the world’s second-best performer during this period, following Argentina.
