KARACHI: The Pakistan Stock Exchange (PSX) started the week on a high note, with the benchmark KSE-100 Index hitting a new all-time record on Monday.
During intra-day trading, the index soared by 526 points to past the 94,000-point mark for the first time in history.
This strong performance followed a remarkable rally in the previous week, during which the index gained over 2,400 points. The surge was largely attributed to the State Bank of Pakistan’s (SBP) decision to lower its policy rate by 2.5 percentage points.
Analysts viewed the rate cut as a positive move to boost liquidity and foster economic stability, which in turn enhanced investor confidence.
In addition to the rate cut, the government’s recent Sukuk auction raised significant capital, with yields across all maturities falling, reflecting strong demand for government-backed securities.
On the economic front, workers’ remittances totaled $3.1 billion, and the SBP’s foreign exchange reserves rose by $18 million, reaching $11.17 billion. On Friday, stocks surged past the 93,000-point mark for the first time, driven by global equity gains and declining local lending rates.
By the end of the week, the KSE-100 Index closed at 93,292, marking a week-on-week gain of 2,432 points, or 2.7%. Muhammad Waqas Ghani, Deputy Head of Research at JS Global, said that average trading volumes surged by 31%, reaching 735 million shares.
The SBP’s decision to cut its policy rate to 15% was driven by a continued decline in inflation. This was the fourth consecutive rate cut in the current easing cycle, bringing the total reduction to 700 basis points from a peak of 22%.
Further fueling market momentum, eight Pakistani companies were added to the MSCI Frontier Markets Small Cap Index, which is expected to attract global investors and increase foreign fund inflows.
However, the Federal Board of Revenue (FBR) reported a shortfall in income tax collection for the first four months of FY25. Meanwhile, the government is preparing for crucial talks with the International Monetary Fund (IMF) mission arriving to Islamabad today.
According to SBP data, remittances for October 2024 stood at $3.05 billion, reflecting a 24% year-on-year increase. AHL Research noted that the KSE-100’s strong performance was driven by the SBP’s historic 250-basis-point rate cut.
In the latest MSCI review, Pakistan’s weight in the MSCI Frontier Markets Index increased to 4.4%, strengthening its position as the second-most liquid market.
