The Pakistan Stock Exchange (PSX) continued its historic rally on Friday, achieving a record-breaking milestone for the second consecutive day as the KSE-100 Index surged past the 115,000-point mark.
The benchmark KSE-100 Index climbed by 991.94 points, or 0.87%, to reach an intraday high of 115,172.44, driven by strong market momentum fueled by improving macroeconomic conditions and expectations of monetary easing.
The market’s bullish sentiment is underpinned by declining inflation, robust remittance inflows, and ongoing government reforms, creating optimism about Pakistan’s economic prospects.
As of December 6, 2024, Pakistan’s foreign reserves stood stable at $16.6 billion, with reserves held by the State Bank of Pakistan (SBP) rising by $13 million to $12.051 billion—the highest since March 2022. Meanwhile, commercial bank reserves saw a slight decrease of $32 million to $4.55 billion.
The Current Account Deficit (CAD) narrowed significantly by 79% year-on-year to $217 million in the first two months of FY2025, with August recording a surplus of $29 million. This improvement is attributed to steady remittance inflows, stable export earnings, and increased domestic production.
Projections for FY2025 suggest exports could reach $33 billion, while remittances are expected to climb to $33.5 billion, aided by government incentives and easing global inflation.
Investor confidence has also been buoyed by expectations of monetary easing. On Wednesday, the government cut Treasury Bill (T-bill) yields by up to 100 basis points, with three-month paper yields dropping to 11.99%. The auction raised Rs1.256 trillion, surpassing the target of Rs1.2 trillion.
Market analysts anticipate a 200-basis-point cut in the SBP policy rate during the December 16 Monetary Policy Committee (MPC) meeting, bolstered by a sharp decline in inflation to 4.9% in November—the lowest since April 2018.
Economic growth indicators further bolster optimism, with passenger car sales surging 62% year-on-year in November and rising 50% over the first five months of FY2025. Additionally, the Asian Development Bank (ADB) approved $530 million in loans to modernize Pakistan’s power infrastructure and expand social safety nets.
The government also revised profit rates on National Savings Schemes (NSS), reducing Savings Account rates by 250 basis points to 13.5%. This is expected to channel funds away from savings instruments into equities, boosting market activity.
Saudi Arabia’s $3 billion deposit extension and $560 million in trade agreements have further stabilized Pakistan’s foreign reserves and strengthened investor confidence.
On Thursday, the KSE-100 Index surged by 3,370.29 points, or 3.04%, closing at 114,180.50. This marked the third-largest single-day point gain in PSX history, reflecting unparalleled market confidence.
With favorable macroeconomic trends and expected monetary easing, the PSX is poised to sustain its upward trajectory in the coming weeks.
