Pakistan Stock Exchange (PSX) showcased a significant bullish trend on Monday. The KSE-100 benchmark index crossed the 2,000-point mark, fueled by the government’s agreement with the International Monetary Fund (IMF) on a much-anticipated bailout package.
The trading day started with a positive outlook, maintaining momentum throughout the session. However, trading was temporarily halted for an hour after the index hit its upper circuit limit of 5% at approximately 9:30 am. Trading resumed around 10:37 pm.
On resuming after the Eid holidays, the market recorded a substantial surge of 2,231.1 points, pushing the benchmark to 43,683.78 points. This unexpected rise of over 5% prompted the temporary suspension. Once the trading resumed after the hour-long halt, the benchmark index soared to 43,923.71 points. This marked a rise of 5.96%, or 2471.03 points, observed around 11:20 am.
The Impact of the IMF Agreement
Pakistan’s negotiation with the IMF has resulted in a $3 billion short-term financial package. While it still requires approval by the IMF board in mid-July, this deal offers some respite for the South Asian economy that was teetering on the brink of default.
Many economists and market Gurus believe that the market’s performance is directly linked to the IMF agreement and the resulting reduction of uncertainty surrounding the balance of payments. This loan is seen as a lifeline for Pakistan, providing a nine-month roadmap amidst one of the worst economic and political crises on record.
The rally mainly to the staff-level agreement with the IMF. On being questioned about the rally’s longevity, Abbas expressed optimism stating, “No, the momentum and sentiment are very positive given now the country has an economic roadmap ahead for the next nine months.”
Previously, Bloomberg had deemed the KSE-100 index the world’s cheapest equity benchmark. This was due to political turmoil and the risk of default, causing investor flight. Islamabad also faces a looming payment of $23 billion in external debt obligations during the fiscal year that commenced in July — almost six times higher than the State Bank of Pakistan’s $4 billion foreign exchange reserves.
