The Pakistan Stock Exchange (PSX) experienced a significant uptick as investors engaged in a buying spree following the International Monetary Fund’s (IMF) completion of the first review of the $3-billion Stand-By Arrangement (SBA). The benchmark KSE-100 Index saw a robust increase of over 600 points during Friday’s trading session.
By 10:25 am, the KSE-100 index reached 65,309.90, marking a remarkable surge of 692.34 points or 1.07%. The bullish trend was widespread, encompassing various index-heavy sectors such as cement, chemicals, commercial banks, oil and gas exploration companies, as well as oil marketing and refinery sectors, all trading in positive territory.
Thursday’s market closure also reflected positive momentum, with the PSX gaining over 1% amid discussions about a potential rate cut in the upcoming Monetary Policy Committee (MPC) meeting scheduled for January. The KSE-100 settled at 64,617.57, up by 697.72 points or 1.09%.
The IMF’s Executive Board decision, announced on Thursday night, not only completed the first review of Pakistan’s economic reform program but also allowed for an immediate disbursement of SDR 528 million (around $700 million). This brings the total disbursements under the SBA to SDR 1.422 billion (approximately $1.9 billion).
Market experts anticipate that the IMF approval will open doors for funding from other multilateral and bilateral institutions. Topline Securities noted in a Friday note that, “After IMF board approval, more dollar funding for Pakistan is likely from bilateral, multilateral, and other sources.” This, in turn, is expected to facilitate rollovers, support foreign exchange reserves, and contribute to currency stability.
On the global front, Asian shares exhibited caution on Friday due to the escalating conflict in the Red Sea region, leading to a surge in oil prices. However, higher-than-expected U.S. inflation data did not deter investors’ expectations of early and aggressive rate cuts in the U.S. and Europe.
MSCI’s broadest index of Asia-Pacific shares outside Japan eased by 0.1%, while Japan’s Nikkei gained 1.2% to reach another 34-year high, propelled by a weakened yen.
The rally in rates globally may have been influenced by dovish comments from European Central Bank (ECB) President Christine Lagarde, indicating potential rate cuts if inflation were to fall to the 2% level.
