PSX surges past 76,000 milestone on ‘significant progress’ on new IMF loan

Bulls dominated the trading floor at the Pakistan Stock Exchange (PSX) as stocks climbed more than 900 points on Friday after the International Monetary Fund (IMF) said it and Pakistan made significant progress on a new loan.

After the opening bell, the benchmark KSE-100 traded in the green. The index climbed 956.44 points, or 1.27 per cent, to stand at 76,070.91 points from the previous close of 75,114.47 at 12:08pm.

Mohammed Sohail, chief executive of Topline Securities, said that stocks went up after the IMF mission said the global lender and Pakistan had made “significant progress” towards reaching a Staff-Level Agreement (SLA).

Moreover, he said that the United Arab Emirate’s pledge to invest $10 billion along with reports of Pakistan selling its stake in Reko Diq to Saudi Arabia also supported “market positive sentiments”.

Raza Jafri, chief executive of EFG Hermes Pakistan, also highlighted that the KSE-100 was “reacting positively” to the UAE’s investment commitment.

“Growing comfort on the external account increases the chances of interest rate cuts commencing from the next monetary policy, which can further rerate the market,” he added.

Awais Ashraf, director of research at Akseer Research, echoed the same sentiments. He said that the $10 billion investment vow and the “favourable statement” by the IMF mission “bolstered investor confidence”.

“This sentiment is reflected in the positive trends observed in the majority of companies listed on the stock exchange,” Ashraf noted.

Furthermore, he said, “The IMF’s new programme emphasises securing the viability of the energy sector through reforms aimed at reducing high energy costs.

“Additionally, the programme focuses on maintaining low and stable inflation through appropriate monetary and exchange rate policies. Consequently, energy and financial sector companies are likely to be well-positioned, while cyclical sectors may continue to face challenges.”

Adnan Sheikh, assistant vice president, research at Pak Kuwait Investment Company, attributed the rise to the IMF’s comment and the United Arab Emirates (UAE) promising investment.

“Despite the 90pc run-up in dollar terms over the past year, The KSE-100 is trading at price-earnings ratio 4x, which is well below its average,” said Sheikh, adding that the ratio suggested that the equities might still have healthy room for further upside.

Yousuf M. Farooq, director of research at Chase Securities, also attributed the gain to reports of Reko Diq deal.

However, he also stated that media reports hinting at taxes on petroleum and some zero-rated products — a move he said was regressive and inflationary in the short term — was expected to further reduce aggregate demand and improve the current account.

Farooq also highlighted that currency stability could lead to inflation gradually coming down to 13.5pc-14pc next month, which he said would increase the expectation of rate cuts going forward and could keep the market upbeat.