The Pakistan Stock Exchange’s (PSX) benchmark index achieved a significant milestone on Thursday as the KSE-100 index soared past 88,000 points for the first time.
According to the PSX website, the KSE-100 index closed at 88,945.98 after gaining 1751.45 points or appreciating by 2.01%.
By 2:05, the benchmark share index touched a lifetime high of 89,126.15, breaking through 89,000 points for the first time.
Analysts say the market is reacting to improved indicators and the stability that comes with being in a $7 billion, 37-month International Monetary Fund (IMF) loan programme approved in September, which Islamabad hopes will be its last.
The index is up 42.53% year-to-date.
“The revival of the IMF program, increasing foreign investment, a relatively stable political environment, and stronger economic indicators such as remittance inflows and export performance,” are reasons for the “improved investor confidence”, said Adnan Sheikh, assistant vice president at Pakistan Kuwait Investment Company.
Pakistan has been struggling with boom-and-bust economic cycles for decades, leading to more than 20 IMF bailouts since 1958.
“The market is appreciating clarity on the macroeconomic landscape,” said Amreen Soorani, head of research at JS Global Capital, adding that the government seems to be performing mostly in line with IMF recommendations.
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Investors and analysts expect a rate cut in the upcoming monetary policy decision by the central bank, scheduled for Nov 4, which analysts say is extending gains in the stock market.
The central bank has already cut the policy rate by 450 basis points since June, from an all-time high rate of 22%.
Market analysts attribute this surge to various factors, including expectations of a potential cut in the policy interest rate and declining yields on government securities, which have encouraged investments in equities.
Additionally, improved corporate earnings are fueling investor confidence.
According to Arif Habib Limited (AHL), the PSX’s performance reflects a year-to-date gain of 41% in 2024, making it one of the highest-performing equity markets globally.
AHL also noted that the State Bank of Pakistan might lower the key policy rate by up to 200 basis points in response to easing inflation and favorable economic indicators.
The bullish trend at the PSX follows a previous day where the index crossed the 87,000 mark, closing at 87,194.53.
Global markets showed mixed results, influenced by rising U.S. Treasury yields and uncertainty surrounding the upcoming presidential election in the U.S.
