Shares gain 297 points on expected inflows after Geneva donors’ conference

Published January 10, 2023
A snapshot of trading activity at the Pakistan Stock Exchange on Tuesday. — Photo via PSX website
A snapshot of trading activity at the Pakistan Stock Exchange on Tuesday. — Photo via PSX website

Shares at the Pakistan Stock Exchange (PSX) recovered on Tuesday, with analysts attributing the bounce-back to the pledges of over $10 billion made at a donors’ conference hosted jointly by the government of Pakistan and the United Nations in Geneva yesterday as well as Saudi Arabia’s decision to study increasing investment in Pakistan.

The benchmark KSE-100 index rose 296.74 points, or 0.73 per cent, to close at 40,801.50 points. It reached an intraday high of 481.68 points, or 1.19pc, around 9:30am shortly after trading began.

Arif Habib Corporation’s Ahsan Mehanti said stocks showed bullish activity after the pledges made at the fundraising conference in Geneva and a likely positive outcome of the ninth review of the International Monetary Fund’s (IMF) $7bn programme.

“Speculations about the earnings season played a catalyst role in the bullish activity,” he added.

Three other analysts who spoke to Dawn.com also attributed the stock market’s rise to the donors’ conference.

Dalal Securities CEO Siddique Dalal termed both the conference and Saudi Arabia’s plans “good news”. He noted that the KSE-100 index recovered sharply in the morning but later erased some of the gains because of a dip in the prices of oil sector shares.

“I believe the country will get some breathing space, survive the next six months, and not default.” He added, however, that the market would remain range-bound in the long run unless the IMF’s ninth review was completed and the difference between the USD-PKR exchange rate in the interbank, open and grey markets was narrowed.

“It remains to be seen what immediate effect [the pledges] will have. However, this is very encouraging and there has been a symbolic impact [on the market] which is good,” said Aba Ali Habib’s Head of Research Salman Naqvi said.

The conference would improve investor confidence, which had been weakened recently, he added.

Meanwhile, First National Equities Limited Director Amir Shehzad said profit-taking could be seen at the upper levels.

Last year’s disastrous floods had submerged more than a third of the country under water and caused losses estimated at $30bn.

During the International Conference on Climate Resilient Pakistan held in Geneva, Prime Minister Shehbaz Sharif had sought $8bn from Pakistan’s international partners over the next three years to rebuild the country.

Donors at the conference, which was attended by officials from over 40 countries as well as international financial institutions, committed to give Pakistan over $10bn.

The pledges come as the country faces a severe cash crunch, with foreign exchange reserves depleting to an eight-year low of $5.576bn during the week that ended on Dec 30, 2022. This amounts to three weeks of imports. Later, media reports said the reserves fell further to $4.5bn after loan repayments to two foreign banks.

This decline left no space for the government to pay back its foreign debts without borrowing more from friendly countries.

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