https://arab.news/b8fqm
- Analysts say the rally at the market is one of the fastest in 20 years despite a lower price-to-earnings ratio
- The bullish sentiment also owes to the expected inflows of $700 million under the IMF short-term loan
KARACHI: Pakistan’s equity market continued to scale record highs with the KSE100 index breaching 60,700 for the first time on Tuesday, making analysts attribute the rally to Caretaker Prime Minister Anwaar-ul-Haq Kakar’s visit to the United Arab Emirates which has kindled hopes for multibillion-dollar investment inflows into the country.
The KSE100 gained over 918 points to close at 60,730 at the end of the trading session, amid ongoing bullish sentiments accompanying the Pakistan PM’s visit to the Gulf region.
During Kakar’s visit, Pakistan and the UAE signed multibillion-dollar memoranda of understanding (MoUs) across diverse sectors, including energy, port operations, waste water treatment, food security, logistics, minerals, and banking and financial services.
“Today’s rally is fueled by the expectations of the multibillion investment flows from the UAE under the SIFC [Special Investment Facilitation Council] initiatives,” Ahsan Mehanti, CEO of Arif Habib Corporation, told Arab News.
The SIFC is a civil-military hybrid forum established in July to fast-track decision-making and promote investment from foreign nations.
Mehanti also pointed to expected inflows of $700 million from the International Monetary Fund (IMF) under a $3 billion short-term financing program, which would help unlock other bilateral financing sources for Pakistan.
He continued that there were expectations of monetary policy ease after the interest rates peaked in recent months.
Analysts have noted that the bullish sentiment at the bourse, which continued to hit record highs, was also fueled by improving macroeconomic indicators.
“Low valuation coupled with foreign buying is supporting this market rally,” Muhammad Sohail, CEO of Topline Securities, commented.
He added that investors were confident that with economic stability in Pakistan, the national currency would also stabilize and interest rates would fall.
“This five-month, 50 percent rally in KSE100 Index is one of the fastest in 20 years,” Sohail continued, noting that the share prices had risen, though the market’s price-to-earnings ratio was still below four times.