PSX
The Pakistan Stock Exchange (PSX) experienced a significant surge at the beginning of the week, rising by over 2,000 points. The upward movement followed a period of political instability, with political calm returning and boosting investor sentiment.
The PSX’s benchmark KSE-100 Index climbed by 2,849.44 points, or 2.6%, reaching 112,362.58 points, up from the previous session’s close of 109,513.14 points. This marked a notable recovery after a sharp increase of more than 3,000 points in the last trading session.
Despite last week’s decline of approximately 9,000 points, the market showed resilience and optimism as it bounced back on Friday. This recovery indicates renewed confidence among investors, who are seeing value at the current levels of the market.
Ahfaz Mustafa, CEO of Ismail Iqbal Securities, attributed the market’s rise to the return of calm on the political front. The ongoing dialogue between the Pakistan Tehreek-e-Insaf (PTI) and the government was seen as a positive development, as they were set to meet for the first time after much anticipation.
Mustafa also noted that the market had regained about 2,000 points early in the trading session, recovering from the previous week’s correction of nearly 9,000 points. He pointed out that fresh inflows from mutual funds and high-net-worth individuals were driving the upward trend.
Additionally, the rise was supported by stable yields on government paper, contributing to overall market growth.
Ahsan Mehanti from Arif Habib Securities mentioned that the surge was broad-based, with stocks across various sectors seeing an uptick. Falling lending rates, following a drop in government bond yields, played a significant role in boosting investor confidence.
Optimistic economic indicators, such as increased exports, remittances, and foreign exchange reserves, were also seen as catalysts for the PSX rally.
Several factors contributed to the market’s strong performance. The State Bank of Pakistan’s decision to reduce the policy rate to 13%, following a 200 basis point cut, supported the positive sentiment.
Furthermore, the country reported its highest current account surplus in a decade, totaling $729 million in November 2024, marking a sharp contrast to the $148 million deficit recorded in November 2023.
Other key developments included a slight increase in large-scale manufacturing output and an increase in power generation by 6% YoY in November 2024.
The market also benefited from a $322 million profit repatriation in November, as well as a significant increase in foreign direct investment (FDI), which grew by 65% month-on-month and 27% year-on-year, totaling $219 million for the month.
Additionally, the government signed a $330 million loan agreement with the Asian Development Bank (ADB) to strengthen social protection programs. The oil and gas sector also saw regulatory proposals for rate hikes, which are expected to generate significant revenue for the government.
In 2024, Pakistan’s stock market outperformed bonds, gold, and the US dollar, according to a report by Topline Securities.
This strong performance was largely attributed to economic reforms initiated under the IMF program, along with a reduction in interest rates, which redirected local liquidity into the equities market.
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