The Pakistan Stock Exchange (PSX) has reacted positively to the staff-level agreement between Pakistan and the International Monetary Fund (IMF), with the KSE-100 Index surging nearly 1,500 points. The index opened around 1% higher and continued to rise, crossing the 81,000 point level within the first hour of trading. At 12:40 pm, the KSE-100 was trading at 81,412.37, representing a gain of 1,468.28 points or 1.84%.
The IMF’s announcement of a 37-month, $7 billion bailout package for Pakistan has boosted investor sentiment, which had already been positive since the budget announcement last month. The package is expected to help Pakistan’s faltering economy, which has been struggling with high expenditure and debt servicing. The IMF program is seen as a roadmap for Pakistan to control its expenditure and manage its debt.
Despite the economic challenges, companies in the KSE-100 have announced impressive profits, and analysts believe that share prices are still trading lower than their actual potential. The PSX has been one of the best-performing markets in Asia, with the KSE-100 Index reaching record highs in the fiscal year 2023-24.
However, in the previous week, the PSX had come under pressure as investors opted to book profits on available margins. Globally, markets were also affected by the attack on US presidential candidate Donald Trump, which has added to political uncertainty. Investors have tended to react to the prospect of a Trump win by pushing Treasury yields higher, in part due to assumptions about his economic policies.
Despite these global pressures, the PSX has shown resilience, and the IMF bailout package is expected to provide further support to the market. The across-the-board buying activity indicates a broad-based rally, with investors optimistic about the future prospects of the market. As the economy stabilizes and companies continue to announce strong profits, the PSX is likely to continue its upward trajectory.
