- Investors supported by macroeconomic strength.
- The telecommunications, banking and energy sectors are generating gains.
- Hascol, Waves and TPL Properties are the most actively traded.
The capital market continued its record streak on Tuesday, reaching an all-time high after briefly breaching the psychological barrier of 96,000 points, with investors supported by encouraging macroeconomic developments and policy clarity from the Finance Minister.
This marks a continuation of Monday’s rally, as the KSE-100 share index of the Pakistan Stock Exchange (PSX) climbed 860.99 points or 0.91 percent to hit an intraday high of 95,856.66.
During intraday trading, euphoric investors pushed the index high to 96,036.48 points, but late profit-taking prevented the market from sustaining that level.
The session opened at the previous close of 94,995.67, maintaining positive momentum fueled by strong performances in key sectors including telecommunications, banking and energy.
Stocks like Hascol Petroleum, Waves Home Appliances and TPL Properties are among the most actively traded, with significant gains reflecting retail and institutional participation.
Investor confidence was boosted by Finance Minister Mohammad Aurangzeb’s assurance that the recent International Monetary Fund (IMF) visit posed no threat to Pakistan’s $7 billion loan program.
He confirmed that there was no discussion of additional taxes, particularly for the salaried class or the manufacturing sector.
Muhammad Saad Ali, Director of Research at Intermarket Securities Ltd, commented: “The conclusion of the IMF mission visit – without the IMF demanding new fiscal measures or a mini-budget – is very positive in helping the market to continue its recovery. »
“Liquidity in the market is very strong, with institutional investors being net buyers as interest rates have fallen sharply and are expected to fall further.”
“So far, the market has not been much worried about the PTI protests that will take place later in November,” he added.
Reinforcing this optimism, the government announced a landmark decision allowing exploration and production (E&P) companies to sell 35% of future gas discoveries to the private sector, a move aimed at mitigating circular debt in the gas sector. energy.
The implementation framework of the amended E&P Policy of 2012 will soon be presented for final approval, thereby providing clarity and opportunities for private sector participation.
The technology sector also contributed to the positive market outlook, with remittances from information and communications technology (ICT) exports increasing 34.9% year-on-year to $1.206 billion between July and October 2024.
In October alone, export remittances reached $330 million, an increase of 38.6% compared to the same month last year.
Sana Tawfik, Head of Research at Arif Habib Limited, highlighted the critical role of improving macroeconomic indicators, such as inflation, in supporting the bull market. “Key indicators, such as inflation, are showing positive trends. Inflation is expected to average around 7.5 per cent in FY25,” she said.
“For November 2024, it is expected to be in the range of 4.5% to 5%. This represents a significant decline,” she noted.
The current account surplus added another level of confidence, with the State Bank of Pakistan (SBP) reporting a surplus of $349 million for October 2024, the third consecutive monthly surplus.
This improvement is attributed to a 7% month-on-month and 24% year-on-year increase in remittances. Foreign exchange reserves also reached their highest level in two years, boosting confidence in the country’s economic recovery.
In total, the current account surplus for the first four months of FY25 stood at $218 million, compared to a deficit of $1.53 billion during the same period last year .
Foreign direct investment (FDI) also showed robust growth, increasing 32% year-on-year to $904.3 million in the July-October period.
October saw a slight decline in FDI compared to the same month last year. Total foreign investment flows for the period reached $1.242 billion.
With reserves expected to exceed $11 billion in the coming weeks, local mutual funds have actively shifted their investments from fixed income to stocks, driving the benchmark index up 20% since september.
Ahsan Mehanti, Managing Director and CEO of Arif Habib Commodities, highlighted the positive macroeconomic factors, saying: “Stocks are upbeat following reports of a current account surplus. »
“Investors weighed in on the increase in foreign exchange reserves and government decisions on economic reforms for state-owned enterprises (SOEs), independent power producers (IPPs) and energy pricing.”
“The next triggers could be to quiet the political noise amid calls for protests from the opposition,” he added.
Telecom and financial stocks led the rise on Monday, with PTCL (38.82 million shares traded) and Sui Southern Gas Company (48.77 million shares) among the best performers.
Analysts have attributed the ongoing recovery to structural reforms, strong corporate profits and the absence of a mini-budget.
The IMF’s recognition of Pakistan’s progress in improving its tax revenue-to-GDP ratio, coupled with the government’s focus on public enterprise reforms and IPP deals, has inspired investor confidence.