On Monday, the Pakistan Stock Exchange (PSX) witnessed a significant surge as the benchmark KSE-100 index surpassed the 48,000 mark, reaching a 24-month high. Market analysts are optimistic about the continuation of this positive sentiment in the days ahead.
The market experienced a bullish trend after Pakistan reached a deal with the International Monetary Fund (IMF), and subsequently, news about the country’s mineral sector further strengthened the gains.
Intra-day trade data revealed that the benchmark index rose by 1,010.72 points or 2.15%, reaching 48,062.56 points, which was an increase from the previous close of 47,076.9 points, marking a 21-month high.
Since Pakistan’s staff-level agreement with the IMF for a $3 billion Standby Agreement, the market has seen an impressive gain of over 6,600 points (+15.9%).
Adding to the positive market sentiment is the government’s initiative, the Special Investment Facilitation Council (SIFC), which is organizing the Pakistan Mineral Summit, starting from August 1. The summit aims to attract foreign investment for projects like Reko Diq and other mines and mineral ventures.
According to Samiullah Tariq, Head of Research at Pakistan-Kuwait Investment Company, the expected investment in the mineral sector is a significant contributor to the market’s rise. Additionally, there are positive expectations of investments in other sectors as a result of the investments in mining.
Furthermore, four leading Pakistani state-owned companies have signed a memorandum of understanding (MoU) to collaborate on a $10 billion Greenfield Refinery project in partnership with Saudi Aramco at the strategic Gwadar port in Balochistan.
Raza Jafri, Head of Equities at Intermarket Securities, explained that the current market run-up is broad-based, led by banks with strong results and valuation rerating, as well as energy stocks with hopes of energy reforms and circular debt resolution.
The overall turnaround in the market is credited to Pakistan securing the IMF SBA program, which unlocked fresh financing from friendly countries and instilled confidence in investors, including foreign funds.
The market is considered attractive in terms of valuation, with the potential to reach new all-time highs as long as risks are managed effectively. Today’s rise brought returns in July to more than 15%, making it the best month in over three years.
Moreover, clarity on the political front, with the likely dissolution of the assemblies before their tenure ends and the handover to interim rulers, has been boosting investors’ confidence. Additionally, Pakistan has been on track with its IMF commitments, part of the gas circular debt has been paid, and some global leaders have shown investment interest in the country, all contributing to the positive outlook for stocks to continue their upward trajectory.