PSX rises 900 points as IMF signals collaboration with new govt

The Pakistan Stock Exchange (PSX) experienced a surge on Friday after the International Monetary Fund (IMF) signaled collaboration with the upcoming coalition government.

According to the PSX website, the benchmark index gained 901.47 points or 1.46% to close at 62,815.81 level. 

The improved market sentiment was primarily attributed to the IMF's commitment to work alongside Pakistan's new administration to promote macroeconomic stability and prosperity across the nation. 

During a press briefing on Friday, Julie Kozack, Director of the Communications Department at the IMF, said, “We look forward to working with the new government on policies to ensure macroeconomic stability and prosperity for all of Pakistan’s citizens.”

She noted that the IMF Executive Board had approved the first review of the Stand-By Arrangement (SBA) with Pakistan on January 11, 2024, leading to total disbursements amounting to $1.9 billion. This arrangement supports Pakistan's endeavors to stabilise its economy, with a significant emphasis on safeguarding the most vulnerable sectors.

Kozack further highlighted that during the interim government's tenure, Pakistan had managed to maintain economic stability by adhering to a stringent monetary policy to curb inflation and bolster foreign exchange reserves.

Additionally, on Friday, newly elected members of the Punjab Assembly took their oath. Around 215 lawmakers of the PML-N and allied parties along with 98 Sunni Ittehad Council (SIC) and PTI-backed lawmakers were administered by outgoing speaker Sibtain Khan.

On the other hand, investors still look hesitant as they wait for clarity on political and economic fronts. 

Brokerage firms also anticipate that potential discussions with the IMF could catalyze the stock market, as Pakistan intends to seek additional loans from the global lender to service its foreign debt. 

IMS Securities projected a market consolidation phase until the new coalition cabinet was established. 

“Expect the market to consolidate until the new coalition cabinet is finalised. Upcoming triggers would be negotiations with the IMF for a new loan program of at least $6 billion critical to continue the ongoing macro recovery. However, political anxiety and an uptick in inflationary pressures would keep the upside in check,” IMS Securities said.