KARACHI: The benchmark of major shares galloped higher on Tuesday, crossing the psychological barrier of 60,000 points for the first time in history.

Speaking to Dawn, Topline Securities Ltd CEO Mohammed Sohail said the rally in stock prices witnessed since the beginning of 2023-24 has been one of the fastest in the last two decades.

One of the key reasons for the steep rise in share prices is unusual foreign buying. Dollar inflows, especially from overseas corporate investors, have helped sustain the rally that has tossed the index up by more than 38 per cent in the last five months alone.

For perspective, net foreign investment in the stock market since the beginning of July has been $36 million versus only $2.5m recorded in the preceding January-June period.

Of all PSX-listed shares worth roughly $30 billion, holdings by foreign investors currently account for $1.3bn or 4.3pc. “Despite incessant foreign buying in recent months, their holdings in the PSX are still nowhere close to the level of 2017,” he said.

The value of all PSX-listed shares in 2017 hovered around $100bn when foreign investors controlled a share of roughly 10pc or $10bn at the time.

“Valuations also continue to be low because corporate earnings have risen at such a fast pace,” he said while referring to the rather depressed price-to-earnings multiple — a ratio that measures a company’s share value relative to its per-share income.

The constituent stocks of the KSE-100 index are still trading at a multiple of four times their collective earnings, a level that’s half the 10-year average of eight.

“I expect the KSE-100 index to hit 75,000 points by December 2024,” said Mr Sohail.

One key threat to this forecast is Islamabad returning to fiscal mismanagement after the conclusion of the ongoing International Monetary Fund loan programme early next year. Failure to execute a peaceful transfer of power in the coming months constitutes another big threat to the stock market rally, he added.

The KSE-100 index closed at 60,730.26 points after gaining 918.92 points or 1.54pc from the preceding session.

The overall trading volume increased 18.5pc to 779.6m shares. The traded value increased 28.9pc to Rs26.1bn on a day-on-day basis.

Stocks contributing significantly to the traded volume included Kohinoor Spinning Mills Ltd (79.2m shares), WorldCall Telecom Ltd (57.4m shares), the Bank of Punjab Ltd (44.3m shares), Cnergyico PK Ltd (31.3m shares) and Treet Corp­oration Ltd (27.2m shares).

Companies registering the biggest increases in their share prices in absolute terms were Hoechst Pakistan Ltd (Rs85), Ismail Industries Ltd (Rs80.28), Pakistan Tobacco Company Ltd (Rs66.37), Nestle Pakistan Ltd (Rs50) and Pakistan Services Ltd (Rs48.17).

Companies registering the biggest decreases in their share prices in absolute terms were Unilever Pakistan Foods Ltd (Rs100), Rafhan Maize Products Company Ltd (Rs57.05), Mari Petroleum Company Ltd (Rs37.19), Pak Suzuki Motor Company Ltd (Rs15.50) and Pakistan Hotels Developers Ltd (Rs15.47).

Foreign investors were net buyers as they purchased shares worth $5.08m.

Published in Dawn, November 29th, 2023