On Friday, the KSE 100 index achieved a historic milestone by closing above 82,000 points for the first time, signaling strong investor confidence driven by favorable economic conditions. This bullish trend comes amid a backdrop of optimism surrounding a potential $7 billion bailout from the International Monetary Fund (IMF), which is expected to be approved by the IMF Executive Board next week. The announcement has injected a sense of hope into the market, particularly as it coincides with a continued easing of monetary policy.
Despite the upbeat sentiment among local investors, foreign investors took a different approach. They engaged in aggressive selling, offloading shares worth $14.08 million, reflecting concerns over rising political tensions in the country. However, this did not overshadow the overall positive movement of the index. Pakistan has successfully met the IMF’s requirements, including securing over $12 billion in debt rollover guarantees from supportive nations like China. This bailout is seen as essential for Pakistan to navigate its pressing external debt obligations and unlock further inflows from other multilateral lenders.
Ahsan Mehanti of Arif Habib Corporation noted that the stock market’s ascent was further fueled by a significant reduction in the cut-off yields of Pakistan Investment Bonds, which fell by up to 335 basis points. This decline in yields, along with improving liquidity and receding inflation, has invigorated investor optimism regarding potential cuts to the benchmark interest rate.
The State Bank of Pakistan has already lowered its policy rate three times since June, bringing it down from a peak of 22% to 17.5%. Business leaders have consistently urged the government to reduce borrowing costs, especially in light of the harsh tax measures driven by the IMF amid high inflation rates, which have stifled economic activity.
As a result of robust economic data, including a $75 million current account surplus and increasing remittances, the KSE 100 index not only reached a new high but also demonstrated resilience in the face of external challenges. The trading volume saw a 5.08% increase, reaching 482.37 million shares, while the total traded value surged by 62.20% to Rs30.18 billion. This record-breaking day reflects the dynamic nature of the market and the collective hope for a more stable economic future in Pakistan.
