KSE-100 continues making history, crosses 56,000 mark with an over 2pc surge
Business
Huge gains in recent days are a result of possible privatisation of SOEs, end of rate hike cycle
KARACHI (Web Desk) – The Pakistan Stock Exchange not only sustained the bullish trend on Monday but also set a new record as the benchmark KSE-100 Index closed the session after going up by 2.04 per cent, or 1,132.22 points, with the energy companies and commercial banks leading the surge.
Hence, the day saw the KSE-100 Index shattering another ceiling by crossing the 56,000 mark for the first time in its history and ended the session at 56,523.58 against the previous closing of 55,391.36.
During the Monday’ session, the benchmark index vacillated between a range of 56,583.59 and 55,644.67 with an overall trading volume of over 298 million [298,536,658] shares.
On the business week ending Oct 27, the stock market had reached the level of 50,943.84. It means the KSE-100 Index has jumped by 5,579.74 points since Oct 30, breaking all the previous records in just over two weeks.
The ongoing upward movement is creating an impression that the market may soon witness a correction through profit-taking. But there are others who feel that the KSE-100 Index can reach new highs of over 58,000.
However, the developments in the coming sessions depend upon how the investors perceive the future and whether they expect the share value to climb, given the fact the stocks are still undervalued when compared with 2017 – the period which saw the market making huge gains which remained the record level till recently.
The local investors are buoyant by the expectation that there won’t be any more rate hikes given a declining inflation and a positive outcome of the ongoing talks with the International Monetary Fund (IMF).
The reason behind the investors rooting for a successful first review by the IMF of the $3 billion stand-by arrangement is that the privatisation of the state-owned enterprises (SOEs) has been seemingly getting nearer, being one of the main conditions set under the agreement.
Islamabad has already implemented the IMF demands – ranging from hiking the fuel prices to the power and gas tariffs while slashing subsidies – which are meant to reduce fiscal deficit. Thus, the privatisation of loss-making SOEs is naturally the next stage.
Meanwhile, other factors have also contributed to the prevailing trend visible in the stock market – improved macroeconomic indicators [reduced fiscal deficit and others], the steps taken to control smuggling by regulating the Afghan Transit Trade and the strong performance shown by the agriculture sector, including bumper rice and cotton crops.
