Shares at PSX hit fresh record on rate cut hopes, IMF talks

Published May 15, 2024
This image shows activity on the Pakistan Stock Exchange on Wednesday at 1:58pm. — Screenshot via PSX data portal
This image shows activity on the Pakistan Stock Exchange on Wednesday at 1:58pm. — Screenshot via PSX data portal

Pakistan Stock Exchange’s benchmark share index touched another all-time high on Wednesday, breaching the key level of 75,000, on hopes that easing inflation could pave the way for interest rate cuts as early as June.

Still attractive stock valuations, expectations of more foreign inflows, and the start of talks with the International Monetary Fund (IMF) on a new loan programme added to the bullish sentiment.

The KSE-100 index was trading at 75,013 points at 10:31am, up 0.7 per cent, after hitting an intraday high of 75,115.

It has surged 80pc over the past year, and it is up 16.1pc year-to-date after an IMF rescue last summer helped the government avert a debt default.

On Monday, the index closed at a record of 73,822, up 1pc.

Mohammed Sohail, CEO of Topline Securities, said Wednesday’s gains were fuelled by foreign fund buying.

On Tuesday, the MSCI index added a Pakistani bank, National Bank of Pakistan , to the MSCI frontier market index. Its shares rose 1.6pc on Wednesday, outperforming the benchmark index.

“We estimate Pakistan’s weight will also increase, thereby having the potential to attract more passive foreign funds,” said Sohail.

The market is picking up steam due to an anticipated decline in inflation to 13.5pc for May and expectations of a monetary easing cycle starting in June, said Shahid Habib, CEO of Arif Habib Limited.

Investors were also optimism about discussions on a new IMF financing programme and the economic roadmap ahead, Habib said.

Pakistan last month completed a short-term, $3 billion IMF programme, but the government of Prime Minister Shehbaz Sharif has stressed the need for a fresh, longer-term programme.

An IMF mission is in Pakistan to discuss the financial year 2025 budget, policies, and reforms under a potential new programme.

Wall Street bank Citi expects Pakistan to reach a four-year agreement with the IMF worth up to $8 billion by end-July, and recommends going long on the country’s 2027 international bond.

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