PSX breaks records amid stellar performance

In a much-awaited rally, the Pakistan Stock Exchange (PSX) demonstrated exceptional performance and surged to a new record high above 67,000 points during the outgoing week, where records were eclipsed a couple of times.

Investors resorted to value hunting as they took encouragement from relative economic stability, a fast-track process for privatisation of Pakistan International Airlines (PIA) and other state-owned enterprises. Pakistan government’s determination to seek a new, larger loan programme from the International Monetary Fund (IMF), a continuous increase in foreign currency reserves and the strengthening rupee also aided the market’s advance, where the KSE100 index gained over 1,850 points during the week.

At the beginning of the week on Monday, stocks experienced a significant recovery, driven by the World Bank’s approval of $150 million project financing and completion of final review under the IMF’s $3 billion standby arrangement (SBA). Next day, the KSE-100 index continued its bullish momentum from the previous session, primarily fuelled by a surge in stock valuations in oil and banking sectors.

PSX soared to a record high on Wednesday as it crossed the 66,500 milestone over progress in the privatisation process for PIA and optimism about a new and larger IMF loan programme. The market continued its highly bullish trend next day as well and surpassed the 67,000-point barrier to a new record high as news emerged about the classification of Pakistan as a secondary emerging market in the FTSE Global Equity Indices.

However, on Friday, the two-day recordbreaking rally paused as the bourse dropped nearly 140 points due to profit-taking by investors, an unimpressive economic growth and a hike in power tariffs. The benchmark KSE-100 index added 1,853 points, or 2.84% week-on-week (WoW), and settled at 67,005.11. JS Global analyst Shagufta Irshad, in her report, wrote that the KSE-100 index reached an all-time-high above 67,000 during the week, taking WoW gains to 3%.

Average trading volumes surged 12% WoW in terms of shares and 7% in terms of value, following stagnation in the previous two weeks with the start of Ramazan. “PIA’s momentum persisted this week as it surged by an additional 23%, fuelled by the accelerating privatisation proceedings,” she said. The company’s board of directors gave the green light to its unbundling and privatisation, signalling a significant step forward in the process. “Concurrently, the new government reiterated its firm commitment to finalising the transaction by the end of June, which further boosted investor confidence in PIA’s future prospects,” she said.

In addition, the government disclosed its plans to sell shares in Oil and Gas Development Company Limited (OGDCL) to Gulf investors. The government also announced that it would engage with the IMF for a new, larger and longer facility in the upcoming spring meetings to be held in mid-April. In another notable announcement, Pakistan’s GDP grew only 1% during 2QFY24 from 2.5% in 1QFY24, where a robust cotton harvest was the key driver of growth.

Moreover, SBP’s reserves stood at $8 billion, the JS analyst added. Arif Habib Limited (AHL) said, in its report, that throughout the week the stock market showcased a stellar performance, taking the index to an all-time high of 67,246 points. “The robust momentum is attributable to value hunting by investors post-stability on the economic front and the ongoing progress related to the privatisation of stateowned enterprises,” it said.

On the economic front, the SBP revealed that repatriation of profits and dividends on foreign investment in Pakistan climbed up $534 million and settled at $759 million in 8MFY24 compared to $225 million in the same period of last year. Additionally, the National Accounts Committee disclosed GDP growth of 1% in 2QFY24 amid higher production of crops including cotton, rice and maize. Foreigners’ buying continued during the week, clocking in at $3.6 million compared to net buying of $2 million last week, AHL added.