PSX surges over 800 points as IMF talks boost investor confidence

The Pakistan Stock Exchange (PSX) witnessed a bullish rally on Friday, with stocks surging more than 800 points following an announcement from the International Monetary Fund (IMF) indicating significant progress in negotiations for a new loan agreement with Pakistan.

Market reaction

The benchmark KSE-100 index jumped 825.75 points, or 1.1 per cent, reaching 75,940.22 points by 11:17 AM, up from the previous close of 75,114.47. This surge came shortly after the IMF’s positive update, reflecting heightened investor confidence.

Key drivers

Mohammed Sohail, CEO of Topline Securities, noted that the initial 500-point increase occurred right after the IMF revealed substantial progress toward a Staff-Level Agreement (SLA) with Pakistan. The market rally was further bolstered by the United Arab Emirates’ (UAE) commitment to invest $10 billion in Pakistan, alongside reports of Pakistan selling its stake in the Reko Diq mining project to Saudi Arabia.

Expert insights

Raza Jafri, CEO of EFG Hermes Pakistan, commented on the positive market reaction to the UAE’s investment pledge, suggesting that growing stability in Pakistan’s external accounts could lead to potential interest rate cuts in future monetary policies, which would further boost the market.

Awais Ashraf, Director of Research at Akseer Research, also pointed out that the $10 billion investment commitment and the IMF’s encouraging statement significantly strengthened investor confidence. “This sentiment is reflected in the positive trends observed in the majority of companies listed on the stock exchange,” Ashraf observed.

Sectoral impact

The IMF’s new programme emphasises the viability of the energy sector through reforms aimed at reducing high energy costs and maintaining low and stable inflation through appropriate monetary and exchange rate policies. Ashraf highlighted that this focus would particularly benefit energy and financial sector companies, although cyclical sectors might continue to face challenges.

What this means for PSX

The PSX’s robust performance underscores the positive impact of international financial support and investment commitments on Pakistan’s market sentiment. As the IMF and Pakistan continue their discussions, the market remains optimistic about further economic stabilisation and growth.

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