On Thursday, the Pakistan Stock Exchange (PSX) experienced a continued upward trend as investors were optimistic that the government and the International Monetary Fund (IMF) would soon reach an agreement to avoid default.
This sentiment also helped boost the value of the local currency, which had seen significant depreciation in recent weeks, in the interbank market. The KSE-100 index, which serves as the benchmark, saw an increase of 1.1% and rose 457.81 points to reach 42,181.13 points at 11:34am.
Ahsan Mehanti, Director of Arif Habib Corporation, attributed the positive stock activity to the “strong rupee recovery ahead of the IMF deal and strong corporate results.”
According to Salman Naqvi, head of research at Aba Ali Habib Securities, the primary driver of the stock market’s rise was the expectation of a deal with the IMF. He noted that the market was currently undervalued and the earnings-to-price ratio was attractive. Naqvi believes that if the agreement with the IMF is reached smoothly, the stock market will see further growth and the value of the rupee will continue to appreciate.
An IMF delegation, led by Nathan Porter, is currently in Islamabad for discussions on the completion of the ninth review of a $7 billion loan program. The successful completion of this review would not only result in a disbursement of $1.2 billion from the IMF but also unlock additional funding from friendly countries and other multilateral lenders that Pakistan needs to prevent default.
Minister of State for Finance and Revenue, Aisha Ghaus Pasha, confirmed that the government and the IMF were “very close to finalizing” a Memorandum of Economic and Fiscal Policies (MEFP). She stated that the MEFP would be handed over to Pakistan once all issues have been resolved. The Ministry of Finance also confirmed that the talks were focused on the fiscal table and financing and that there was broad consensus on the reform actions and measures.