IMF mission, investor hopes take PSX to highs

KSE-100 index rises 1.6% week-on-week to 94,764 points

KARACHI:

Pakistan's stock market closed the outgoing week at a record high, rising 1.6% because of growing investor optimism.

A key factor behind the rally was the encouraging remarks from the International Monetary Fund (IMF) mission, which praised Pakistan's efforts to boost the tax-to-GDP ratio by nearly 1.5%.

This development combined with a stay order against the additional tax on banks and the assurance of a lower advance-to-deposit ratio (ADR) target, helped calm nerves and provided a much-needed boost.

As a result, the market saw a surge in buying activity, overshadowing concerns over the possibility of a mini-budget.

According to the daily trading activity, stocks rallied on Monday to a new all-time high at 93,648 points, driven by blue chips, as investor optimism grew over news of impending privatisation of state-owned enterprises (SOEs) and foreign interest triggered by the revised MSCI index weight for Pakistan.

Next day, the KSE-100 index lost more than 400 points, weighed down by institutional profit-taking on concerns over the IMF's first review of the $7 billion Extended Fund Facility (EFF) and an impending decision on the rollover of China's energy debt.

On Wednesday, the PSX entered a consolidation phase and closed with a modest recovery of 131 points on investor interest mainly in second and third-tier stocks.

It enjoyed a highly positive activity next day, when the bourse touched the high of 94,290 points in intra-day trading.

Investor activity picked up on Friday as the PSX saw a strong rally that took the KSE-100 index to a record high as concerns over a potential mini-budget eased.

At the close of the week, the benchmark KSE-100 index reached 94,763.64 points with a gain of 1.6% week-on-week (WoW).

JS Global Deputy Head of Research Muhammad Waqas Ghani wrote in his review that the KSE-100 remained bullish during the week. Average volume increased 20% to 878 million shares.

A delegation of the International Monetary Fund (IMF) visited Pakistan to review the economic performance during 1QFY25. The positive momentum at the PSX was aided by the Federal Board of Revenue's (FBR) assurance to the IMF that the Rs12.9 trillion revenue target would be upheld, he said.

Market sentiment also strengthened following reports that there would be no mini-budget or new tax measures, and no sales tax would be levied on petroleum products.

The IMF team also engaged with provinces regarding their contribution to the tax collection due to concerns that the provinces, particularly Punjab, had not achieved the expected revenue surplus.

On November 14, the finance ministry informed the IMF team that it had updated 1QFY25 fiscal operation figures, which now showed a surplus of Rs40 billion for Punjab. With these figures, all provinces now have a budget surplus.

Banking sector stocks received impetus after the court's decision to temporarily relieve banks of the additional tax for failing to meet the ADR target.

According to the latest data, the State Bank's foreign currency reserves came in at $11.3 billion with a weekly increase of $84 million, the deputy research head added.