Pakistan’s benchmark share index crosses 100,000 for first time
- 2 hours ago
Pakistan’s benchmark share index breached 100,000 points for the first time on Thursday and ended up 0.8 per cent, closing at a record high.
The South Asian economy has been on a fragile path to recovery, helped by a $7 billion International Monetary Fund (IMF) bailout that was approved in September. The benchmark index has surged 25 per cent since July’s staff level agreement with the IMF, and is one of the top gainers across emerging markets.
The market is up more than 50 per cent this year in dollar terms.
The index closed up more than 5 per cent per cent on Wednesday, recovering losses from the previous day, when it fell 3.6 per cent on news of political clashes.
The market has jumped from 40,000 to 100,000 in 17 months, said Mohammed Sohail, CEO of Topline Securities, with the IMF bailout and new-found fiscal and monetary discipline improving investor sentiment.
A “faster-than-expected fall in inflation and interest rates have added cash liquidity,” Sohail added.
Pakistan slashed interest rates by a record 250 basis points to 15 per cent earlier in November in a bid to revive its economy amid a big drop in inflation, which came in at 7.2 per cent in October, from a multi-decade high of nearly 40 per cent in May 2023.
Even with the rally, Pakistan shares have an average price-to-earnings ratio of around five, compared to a historical average of around seven.
However, Ahmad Mobeen, senior economist at S&P Global Market Intelligence, told Reuters that while investor sentiment had improved, the stock market surge “does not directly correlate with long-term growth prospects”.
“Sustainable growth will require addressing structural challenges, including low investment, high energy costs, under-taxed sectors, a consumption-heavy economy, and a large informal sector,” he said.
