Pakistan benchmark stock index hits record high on hopeful IMF outlook

Published May 13, 2024
This image shows activity on the Pakistan Stock Exchange on Monday at 3:38pm. — Screenshot via PSX data portal
This image shows activity on the Pakistan Stock Exchange on Monday at 3:38pm. — Screenshot via PSX data portal

Bullish momentum continued at the Pakistan Stock Exchange (PSX) on Monday as shares gained more than 700 points.

The benchmark KSE-100 index was up by 788.56 points, or 1.08 per cent, at 1:55pm, reaching 73,874.06 points from the previous close of 73,085.50 points. Finally, the index closed at 73,799.1, up by 713.61 points from the previous close.

During intraday trade, the benchmark index breached the 74,000 barrier, touching 74,114.22, before dropping back below within an hour.

Speaking to Dawn.com, Tahir Abbas, head of research at Arif Habib Limited, said the market was gaining momentum as inflation was “anticipated to decline significantly to 13pc in May”. He also noted there were “expectations of a monetary easing cycle in June”.

Abbas highlighted that investor confidence was “bolstered by positive sentiments” surrounding the International Monetary Fund (IMF) programme discussions and the “forthcoming economic roadmap”.

“Additionally, the market is currently trading at an appealing PE (price-to-earning) ratio of 4.1x, representing a 46pc discount compared to the mean PE of the past five years,” he said.

It should be noted that an IMF mission will meet Pakistani authorities this week to discuss the “next phase of engagement”, an official from the international money lender confirmed on Sunday.

Yousuf M Farooq, director of research at Chase Securities, also attributed the upward trajectory to market expectations of discussions with the IMF going smoothly, in addition to declining inflation numbers which “have led to an interest in cyclical”.

“Inflation is expected to drop to 14-15pc when numbers are published for May, making a case for a sharp decline in interest rates going forward,” he said, explaining that valuations go up when interest rates go down.

Mohammed Sohail, chief executive of Topline Securities, noted that Topline’s latest strategy note put the index target at 106,000 by June 2025.

“Now investors are also expecting that the market rally will continue after the IMF country report showed next year’s average CPI (consumer price index) near 13pc,” he said.

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