PSX surges as calmness prevails on political front

The Pakistan Stock Exchange (PSX) began the week on a strong note, surging over 2,000 points as political calm returned following a period of heightened agitation.

The PSX’s benchmark KSE-100 Index jumped 2849.44 points or 2.6% to hit 112,362.58 points, up from the previous session’s close of 109,513.14 points, which also witnessed a sharp increase of more than 3,000 points.

Last week saw a decline of around 9,000 points, but the market recovered on Friday, indicating renewed optimism and suggesting that investors are finding value at current levels.

Ismail Iqbal Securities Chief Executive Officer Ahfaz Mustafa told Geo.tv that the market’s rise can be attributed to the “calmness on the political front”.

The Pakistan Tehreek-e-Insaf (PTI) and the government will begin dialogue later today after much ado, with the meeting set to take place in-camera under the chairmanship of National Assembly Speaker Ayaz Sadiq.

Mustafa further added that the market has surged about 2,000 points in early trade recouping losses from the earlier correction of roughly 9,000 points earlier last week.

“The correction is over and fresh inflows are being reported from mutual funds and high net-worth individuals driving the market upwards,” he said, further adding that the surge was also due to the “stable yields on government paper”.

Arif Habib’s Ahsan Mehanti said that the surge was led by scrips across the board as investor weigh falling lending rates after a fall in government bond yeilds.

“Upbeat economic indicators on surging exports, remittances and foreign exchange reserves played a catalyst role in the surge at PSX,” he added.

Several other factors have also led to the market’s surge, including the State Bank of Pakistan’s move to cut the policy rate to 13% after a reduction of 200bps.

The country also reported its highest current account surplus in a decade, amounting to $729 million in November 2024, a notable turnaround from the $148 million deficit recorded in November 2023.

Moreover, the large scale manufacturing sector output posted a meagre increase of 0.02% YoY in November, however, remained in negative territory during 4MFY25.

Pakistan’s power generation increased by 6% YoY in November 2024, clocking in at 8,032GWh. The government raised Rs382 billion through PIBs where cut-off yields fell by up to 55bps across tenors.

Pakistan also witnessed $322 million in profit repatriation in November, taking the 5MFY25 tally to $1.13 billion, up 112% YoY. The finance minister tabled a bill which included stringent taxes and regulations for non-filers. Moreover, the government signed a $330 million loan agreement with the ADB to strengthen social protection.

Foreign direct investment (FDI) for the month of November came in at $219 million (up 65% MoM and 27% YoY) and the Oil & Gas Regulatory Authority’s (OGRA) proposal to the federal government to increase gas rates by up to 26% to generate about Rs847.33 billion during the current fiscal year.

In 2024, Pakistan’s stock market beat bonds, gold and the US dollar, according to a report from Topline Securities, largely due to economic reforms initiated by the IMF programme and a reduction in interest rates, which redirected local liquidity into equities.