Shares at PSX surge to all-time high on rating agencies’ dovish outlook

Published June 20, 2024
Bullish climb witnessed at the Pakistan Stock Exchange on Thursday — PSX data portal
Bullish climb witnessed at the Pakistan Stock Exchange on Thursday — PSX data portal

Bulls continued their stampede post-Eid as shares at the Pakistan Stock Exchange (PSX) climbed more than 2,000 points to reach an all-time high, which analysts attributed to the “dovish outlook” of rating agencies for the country.

The benchmark KSE-100 index gained 1738.81, or 2.27 per cent to stand at 78,445.58 — an all-time high — from the previous close of 76,706.77 points at 1:30pm. Finally, the index closed at 78,801.53, up by 2094.76 or 2.73pc from the previous close.

Mohammed Sohail, chief executive of Topline Securities, attributed the bullish momentum to “positive sentiments continue amid hope that new budget will help [in] securing [a] long-term IMF deal”.

Raza Jafri, chief executive of EFG Hermes Pakistan, said, “The market is pricing in the favourable news over the Eid holidays, including Fitch’s dovish view on inflation outlook and the proposed reduction in electricity tariffs for industries.”

“The bout of modest foreign selling pressure this month, possibly due to FTSE rebalancing, also appears to be largely behind us,” he added.

Yousuf M Farooq, director research at Chase Securities, highlighted the upward trajectory was due to “’declining fixed income yields, no additional capital gains and dividend taxes in the budget, rationalisation of energy tariffs, improving economic sentiment and reduced uncertainty over the balance of payments situation”.

Additionally, Farooq highlighted that “comments from Fitch and Moody’s have all contributed to today’s market rally”.

Awais Ashraf, director research at AKD Securities, echoed similar sentiments.

He said, “Positive statements from global credit rating agencies Moody’s and Fitch about Pakistan’s budget and economic outlook bolster investor confidence in the government’s strategy to address fiscal and external imbalances.”

Shahab Farooq, director of research at Next Capital Limited, noted that the index had crossed the 78,000 level “amid positive comment by the two leading rating agencies”.

Additionally, he attributed the climb to factors such as the “strong possibility of signing of SLA with the IMF for a new larger and longer programme, inflation expected to remain low at around 12pc for June, rethinking by the government on some tax measures announced in the budget and institutional buying”.

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Smog hazard
Updated 05 Nov, 2024

Smog hazard

The catastrophe unfolding in Lahore is a product of authorities’ repeated failure to recognise environmental impact of rapid urbanisation.
Monetary policy
05 Nov, 2024

Monetary policy

IN an aggressive move, the State Bank on Monday reduced its key policy rate by a hefty 250bps to 15pc. This is the...
Cultural power
05 Nov, 2024

Cultural power

AS vital modes of communication, art and culture have the power to overcome social and international barriers....
Disregarding CCI
Updated 04 Nov, 2024

Disregarding CCI

The failure to regularly convene CCI meetings means that the process of democratic decision-making is falling apart.
Defeating TB
04 Nov, 2024

Defeating TB

CONSIDERING the fact that Pakistan has the fifth highest burden of tuberculosis in the world as per the World Health...
Ceasefire charade
Updated 04 Nov, 2024

Ceasefire charade

The US talks of peace, while simultaneously arming and funding their Israeli allies, are doomed to fail, and are little more than a charade.