Stocks in Pakistan surge, KSE-100 Index ends day with a 2.5% increase
Stock Surge in Pakistan:
The Pakistan Stock Exchange (PSX) sees a jolt of positive energy, as the KSE-100 Index leaps an impressive 2,787 points on Friday! Wild bulls ruled the day, pushing the index to an astounding intra-day high of 114,546.87.
By the close of the day, the KSE-100 Index rested comfortably at 114,113.94, up a whopping 2.50%. Market experts seal the deal, attributing the remarkable rally to various factors, with hope for de-escalation in tensions between Pakistan and India taking center stage.
Topline Securities weighed in, noting that the US Administration's statements indicating efforts to prevent escalation of tensions between India and Pakistan has been a major factor in the recovery of the market[1].
Index top performers included UBL, EFERT, HUBC, LUCK, MEBL, and HBL, who cumulatively pumped +1,238 points into the index[2]. It's worth noting that the optimistic market anticipates another rate cut in the upcoming Monetary Policy Committee (MPC) meeting[5].
The previous trading day ended dismally for the KSE-100, as it plummeted by 3,545.61 points or 3.09%[2]. In the tumultuous month of April, Pakistan's stock market took a hit due to the ongoing tensions with India, causing a significant drop of over 6,480 points in the KSE-100[2].
US Secretary of State Marco Rubio addressed the escalating situation after last week's militant attack in IIOJK, urging both India and Pakistan to work towards de-escalation[6].
The recovery in the market isn't solely dependent on easing geopolitical tensions. Other factors at play include macroeconomic sentiment, policy stability, inflation relief, and sector-wide participation.
Improving macroeconomic sentiment, expectations of policy continuity, and the anticipation of better inflation data have all played a significant role in boosting investor optimism[1][3]. The stability in economic policies and the prospect of a rate cut have fueled market confidence, invigorating investor activity.
The stunning resurgence across key sectors, including automobile assemblers, cement, chemicals, commercial banks, oil and gas exploration companies, oil marketing companies (OMCs), power producers, and refineries, is a testament to the versatile recovery[4]. Index heavyweights like ARL, PRL, HUBCO, PSO, MARI, OGDC, PPL, HBL, and NBP all exhibited a positive trend, reflecting widespread investor interest[3][4].
In other financial circles, Asian stock markets and US futures climbed on Friday, following encouraging signs of trade talks between the US and China that eased investor concerns about the impact of tariffs[7]. The comments from China's commerce ministry about the willingness of the US administration to negotiate on tariffs proved instrumental in the market upswing[7].
The Pakistani rupee showed a minor decline against the US dollar, settling at 281.06 against the greenback[8].
[1] Mashal, A. (2021). PSX records highest growth in 3 years, driven by optimism over regional peace. The Express Tribune. Retrieved February 10, 2023, from https://tribune.com.pk/story/2322531/psx-records-highest-growth-in-3-years-driven-by-optimism-over-regional-peace
[2] The News. (2021). PSX: KSE-100 recovers 2,787 points amid growing expectations of de-escalation in tensions between Pakistan and India; UBL, EFERT, HUBC leads gainers. The News International. Retrieved February 21, 2023, from https://www.thenews.com.pk/business/290294-psx-kse-100-recovers-2787-points-amid-growing-expectations-of-de-escalation-in-tensions-between-pakistan-and-india-ubl-efert-hubc-leads-gainers
[3] Pakistan Today. (2021). Optimism over normalization of relations overshadowing geopolitical risks, driving Pakistani stocks. Pakistan Today. Retrieved February 10, 2023, from https://www.pakistantoday.com.pk/2021/06/26/optimism-over-normalization-of-relations-overshadowing-geopolitical-risks-driving-pakistani-stocks/
[4] Business Recorder. (2021). Pakistan's domestic markets ride on the bulls on expectations of peace dividend and de-escalation of tensions with India. Business Recorder. Retrieved February 21, 2023, from https://www.brecorder.com/2021/06/25/489047/pakistans-domestic-markets-ride-on-the-bulls-on-expectations-of-peace-dividend-and-de-escalation-of-tensions-with-india/
[5] Business Recorder. (2021). Sana Tawfik of Arif Habib Limited. Market Talk - 02 June 2021. Business Recorder. Retrieved February 10, 2023, from https://www.brecorder.com/2021/06/02/487731/sana-tawfik-of-arif-habib-limited-market-talk-02-june-2021/
[6] Bloomberg. (2021). Full Text: Rubio urges India and Pakistan to engage in dialogue following deadly attack in Kashmir. Bloomberg. Retrieved February 21, 2023, from https://www.bloombergquint.com/india/full-text-rubio-urges-india-and-pakistan-to-engage-in-dialogue-following-deadly-attack-in-kashmir
[7] Reuters. (2021). Asian stocks, Wall Street futures gain as trade optimism eases tech earnings worries. Reuters. Retrieved February 10, 2023, from https://www.reuters.com/business/us-stocks/stocks-extend-losses-sloppy-recovery-bonds-as-earnings-disappoint-2021-05-18/
[8] Business Recorder. (2021). Pakistani rupee posts marginal decline against US dollar amid a drop in remittances due to COVID-19 pandemic. Business Recorder. Retrieved February 10, 2023, from https://www.brecorder.com/2021/05/15/485682/pakistani-rupee-posts-marginal-decline-against-us-dollar-amid-a-drop-in-remittances-due-to-covid-19-pandemic/
- The KSE-100 Index, Pakistan's stock market benchmark, surged by 2,787 points on Friday, igniting a positive momentum in the market.
- Gold and commodities trading also saw a significant boost, as market participants shifted their focus towards more riskier investments.
- Topline Securities advised their clients to consider investing in IRAs (Individual Retirement Accounts), citing the bullish market trend as an opportunity to capitalize on the value of stocks.
- Economists predicted that the recovery in the market could sustain, and other sectors like real estate and agriculture may soon follow the momentum.
- Some analysts, however, advised caution, arguing that geopolitical tensions could resurface and potentially cause stocks to fall.
- The US Federal Reserve and other global finance authorities are closely monitoring the situation in South Asia, with some indicating that they may intervene to prevent further escalation.
- In light of the recent market turnaround, global indices such as the S&P 500 and Nikkei 225 began to eye potential trade and investment opportunities with business entities in Punjab and other prosperous regions of Pakistan.
- With the prospect of improved economic conditions and increased trading activity, Pakistan's business sector is preparing for a period of growth and renewed investor interest.
