KARACHI: After failed attempts in the previous two sessions to settle above 50,000 points, the KSE-100 index finally managed to accomplish the feat for the first time on Thursday.

The buying frenzy intensified in the last hour, which saw the index surge 435.59 points, or 0.88 per cent, to close at 50,192.36. With the addition of Rs60 billion on Thursday, the market capitalisation of the Pakistan Stock Exchange (PSX) also reached Rs10 trillion.

The meteoric rise of the PSX, which began in November last year, is attributed by some analysts less to the underlying companies’ prospective earnings and growth and more to the liquidity that swamps the market.

And investors are banking on more cash entering the market. Analysts are looking at foreign portfolio investment of around $300m-500m, following the reclassification of the PSX into the MSCI emerging-market category from frontier markets in May this year. The receipt of $100m by stockbrokers for the sale of 40pc strategic shares and 20pc stock in initial public offering to local investors is also reckoned to make its way into the equity market.

Having provided a record return of 46pc in 2016, investors have entered the market in droves sending stock prices to hit the ceiling. Although foreign investors were persistent net sellers of $267m worth stocks in 2016, it was successfully absorbed by the mutual funds and individuals.

Arif Habib, former chairman of the stock exchange, cited the low interest rate regime, expectation of gro­w­th in corporate profits and improvement in security situation in the country as the reasons for the high-flying stocks. “Things could get better as the perception over the future of Pakistan economy improves and energy shortage is addressed,” he said.

A big sentiment booster has been the recent divestment of 40pc PSX strategic stock to the Chinese consortium, comprising four Chinese exchanges and two local financial institutions. “The Chinese participation would add value to the PSX due to possible technological advancement, product development and potential cross-border listing,” analysts say.

Published in Dawn, January 27th, 2017

Opinion

Editorial

Misplaced priorities
Updated 19 Jul, 2024

Misplaced priorities

The government must call its APC at the earliest and invite all stakeholders to take part; this matter cannot be delayed further.
Oman terror attack
19 Jul, 2024

Oman terror attack

THE normally peaceful sultanate of Oman was shaken by sectarian terrorism on Monday when militants belonging to the...
Urban flooding
19 Jul, 2024

Urban flooding

THE provincial authorities have been taking precautionary measures, or so we have been told, to cope with emergency...
A way forward
Updated 17 Jul, 2024

A way forward

Before political leaders inflict more damage, they must give talks a chance.
Export delusions
Updated 18 Jul, 2024

Export delusions

Plummeting exports as a ratio of GDP is one of the major reasons driving the current economic slowdown and the balance-of-payments crisis.
Diversity in UK politics
17 Jul, 2024

Diversity in UK politics

THE recent UK elections have ushered in the most diverse parliament in the nation’s history. Under the leadership...