PSX
The Pakistan Stock Exchange (PSX) continued its upward trajectory on Wednesday, with the benchmark KSE-100 index climbing by 736.10 points or 0.81%, reaching an intra-day high of 91,600.19 points.
This marked an increase from the previous close of 90,864.09 points. Investor optimism was buoyed by strong expectations of an interest rate cut by the State Bank of Pakistan (SBP).
Samiullah Tariq, Head of Research at Pakistan-Kuwait, noted that market sentiment was driven by several factors, including declining yields, strong corporate earnings, and limited investment alternatives due to taxation policies.
Falling yields were particularly supported by speculation surrounding the SBP’s upcoming Monetary Policy Committee (MPC) meeting, where experts expect a potential 200-basis-point rate cut, bringing the policy rate to 15.5%.
Saad Ali, Director of Research at Intermarket Securities, attributed the rally to reduced political uncertainty, which has allowed the government to focus more on reforms led by the International Monetary Fund (IMF).
He also highlighted the market’s strong liquidity due to easing interest rates and the underperformance of other asset classes, especially real estate. Stable global oil prices and a robust earnings season further strengthened the market’s momentum.
In the previous MPC session, the SBP enacted its largest rate cut since April 2020, lowering the key policy rate by 200 basis points to 17.5%. This was motivated by easing inflationary pressures and declining global oil prices.
Since June 2024, the central bank has implemented three rate cuts, totaling a reduction of 450 basis points.
Analysts now speculate that an additional cut, possibly as high as 400 basis points, could be made by December, which has rekindled interest from foreign investors.
Inflation figures have also contributed to the optimistic market outlook. The Pakistan Bureau of Statistics (PBS) reported a year-on-year inflation rate of 6.9% in September 2024, the lowest since January 2021.
This marked a significant decline from August’s inflation rate of 9.6%, attributed to a high base effect, stabilizing energy and commodity prices, and a steady currency.
Overall, the combination of favorable macroeconomic conditions, easing inflation, and expectations of further rate cuts has fueled the surge in investor confidence, propelling the PSX to record highs.
This positive market outlook reflects broader optimism about Pakistan’s economic recovery and potential for further growth.
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