The Pakistan Stock Exchange (PSX) started the week on a high note, jumping more than 4,000 points as political calm returned after a period of increased unrest.
The PSX’s benchmark KSE-100 index jumped 4,568.73 points, or 4.17 percent, to 114,081.87 points, up from the previous session’s close of 109,513.14 points, which also saw a sharp increase of over 3,000 points.
Last week there was a drop of around 9,000 points, but the market recovered on Friday, indicating renewed optimism and suggesting that investors are finding value at current levels.
Ismail Iqbal Securities, CEO of Ahfaz Mustafa, said Geo.tv that the market rise can be attributed to “calm on the political front”.
The Pakistan Tehreek-e-Insaf (PTI) and the government will begin the dialogue later today after much fanfare, with the meeting expected to take place behind closed doors under the chairmanship of National Assembly Speaker Ayaz Sadiq.
Mustafa further added that the market surged by around 2,000 points in early trading, recovering losses from the previous correction of around 9,000 points earlier last week.
“The correction is over and new capital inflows are being reported from mutual funds and high net worth individuals, which is boosting the market higher,” he said, adding that the rise was also due to “stable yields on government securities”.
Arif Habib’s Ahsan Mehanti said the rise was driven by scripts across the board as investors eyed a cut in lending rates after a fall in government bond yields.
“Optimistic economic indicators on rising exports, remittances and foreign exchange reserves played a catalytic role in the rise of the PSX,” he added.
Several other factors also led to the market rally, including the State Bank of Pakistan’s decision to cut its policy rate to 13% after a 200 basis point cut.
The country also recorded its highest current account surplus in a decade, amounting to $729 million in November 2024, a notable turnaround from the $148 million deficit recorded in November 2023.
Additionally, large-scale manufacturing sector output showed a slight increase of 0.02% year-on-year in November, but remained in negative territory during 4MFY25.
Pakistan’s electricity generation increased by 6% year-on-year in November 2024, reaching 8,032 GWh. The government raised Rs 382 billion through PIBs whose yield limits fell by up to 55 basis points depending on the maturity.
The country also saw a profit repatriation of $322 million in November, bringing the 5MFY25 total to $1.13 billion, up 112% year-on-year. The finance minister tabled a bill that included strict taxes and regulations for non-filers. Furthermore, the government signed a $330 million loan agreement with the ADB to strengthen social protection.
Foreign direct investment (FDI) for the month of November stood at $219 million (up 65% month-on-month and 27% year-on-year) and the Oil and Gas Regulatory Authority’s proposal Gas (OGRA) to the Federal Government to increase gas tariffs by up to 26% to generate approximately Rs847.33 billion in the current financial year.
In 2024, Pakistan’s stock market beat bonds, gold and the US dollar, according to a Topline Securities report, largely due to economic reforms initiated by the IMF program and a reduction in interest rates, which redirected local liquidity towards equities.