ISLAMABAD: Stocks surged past the crucial resistance level of 80,000 points on Wednesday, reaching an all-time high, driven by optimism surrounding Pakistan’s progress towards securing vital economic support, according to traders.
The benchmark KSE-100 Shares Index of the Pakistan Stock Exchange (PSX) closed 0.9% higher, peaking at a record 80,405 points during the day before settling at 80,233.67 points.
Minister of State for Finance, Revenue, and Power, Ali Pervaiz Malik, announced on Wednesday that Pakistan was nearing a staff-level agreement with the International Monetary Fund (IMF) for a bailout exceeding $6 billion, following the fulfillment of the IMF’s requirements in its annual budget.
Since the budget presentation on June 12, the index has surged approximately 10%, bolstered by optimism surrounding the potential IMF bailout aimed at strengthening the struggling economy.
“We aim to finalize this (IMF) process within the next three to four weeks,” Malik told Reuters. He indicated that Islamabad was aiming to secure a staff-level agreement before the IMF board’s recess.
“I believe the package will exceed $6 billion,” Malik stated, emphasizing the IMF’s forthcoming validation as the primary focus. However, the IMF has not yet responded to these remarks from the junior finance minister.
According to brokerage firm Arif Habib Limited (AHL), 65 shares registered gains, reflecting a positive trend, while 31 shares experienced losses.
“The top performers included HBL PA, which saw a remarkable increase of 5.15%, POL PA rising by 4.35%, and HUBC PA climbing by 1.69%, driving the index upwards,” stated the AHL report.
Conversely, FFC PA declined by 1.48%, EFERT PA by 1.28%, and PAKT PA took a significant hit, plummeting by 7.09%.
AHL’s report highlighted that the 80,000-point milestone now serves as a robust support level for potential market expansion in the upcoming days, instilling a renewed sense of confidence among investors.
Raza Jafri, CEO of EFG Hermes Pakistan, attributed the market’s gains to increased buying activity in State-Owned Enterprises (SOEs) such as the National Bank of Pakistan (NBP) and Oil and Gas Development Company Limited (OGDCL). He pointed to reports indicating progress in privatization, strategic stake sales, and resolution of legacy issues.
“There is growing anticipation of substantial interest rate cuts in the second half of 2024 and timely entry into an IMF program,” Jafri added.
Finance Minister Muhammad Aurangzeb emphasized the government’s commitment to a two-to-three-year privatization plan, starting with around 24 SOEs, including the potential privatization of Pakistan International Airlines.
Meanwhile, Saad Ali, Director of Research at Intermarket Securities, cited optimism regarding the IMF program and continued macroeconomic recovery post-budget approval as key drivers behind the market surge.
“The market is undergoing re-rating from historically low valuations and anticipates lower interest rates in the future,” Ali noted.
Earlier, stocks closed significantly higher at 79,552.89 points, buoyed by expectations of improved earnings from SOEs in the oil sector.
Khurram Shehzad, CEO of Alpha Beta Core, attributed investor confidence to the budget’s alignment with most of the IMF’s conditions for a larger and longer program, promoting economic reforms and stability.
Pakistan’s sovereign dollar bonds also saw gains, with the 2036 maturity rising by 1.19 cents to trade at 74.79 cents on the dollar by 1132 GMT.
