KARACHI: Pakistan’s key stock index crossed the 73,000 mark on Friday to close the weekend trading session at an all-time high on renewed hopes of an interest rate cut and improving economic indicators as well as optimism about Saudi investments, analysts said.
The KSE-100 index went up by 427 points and closed at 73,086 points on investor optimism stemming from an anticipated lower inflation rate this month, which fueled speculation of an interest rate cut in the next monetary policy in June.
Last month, the Monetary Policy Committee (MPC) of the State Bank kept the key interest rate steady at 22 percent for the seventh straight meeting.
“Pakistan stocks exchange made another new high today crossing 73,000 amid expectations that inflation may fall at a faster than expected rate,” Muhammad Sohail, CEO of Topline Securities, told Arab News, adding that optimism about Saudi investments had also played a key role in the bullish trend at the bourse in the last few days.
The Pakistan Stock market performed extremely well during the outgoing week and the index increased by around 1180 points.
“There are two to three reasons for this surge, first being the gradual improvement in Pakistan’s economic indicators,” Sheheryar Butt, Portfolio Manager at Darson Securities, said.
The South Asian nation has witnessed increasing remittance by 28 percent to $2.8 billion while the central bank’s reserves soared above $9 billion, the highest in 1.5 years.
“Along with this, our currency is maintained at Rs278 against the US dollar and it is also stabilizing in the interbank market. We are also seeing an increase in remittances,” Butt said.
Pakistan saw one of the highest inflation regimes last year, with 38 percent inflation recorded in May last year, which eased to 17.3 percent this April. Pakistani analysts expect a further fall in May, renewing optimism of an interest rate cut from the current 22 percent in the upcoming monetary policy.
“Inflation in Pakistan is expected to decrease significantly to around 15 percent in May 2024. This substantial drop is a testament to the effective efforts of the government and central bank in curbing inflation,” Sohail added.
Talks with the International Monetary Fund (IMF) for a new bailout package and Saudi investment optimism have been key drivers of the stock index in recent days while the expected arrival of the Saudi Crown prince later this month is being seen as another “milestone achieving factor.”
“The IMF team is going to visit Pakistan and there are brighter chances for Pakistan to get a longer program with the IMF. Pakistan will easily get a program of $6-8 billion for 2-3 years,” Butt said, adding that the Saudi crown prince’s visit could see the stock market cross the 85,000 level this year.