Spurred by improving macroeconomic fundamentals, including an increase in Pakistan’s foreign reserves, the stock market crossed the 109,000-point mark on Friday, continuing its record-breaking streak.
The Pakistan Stock Exchange (PSX) continued its record breaking streak on Friday, with the KSE-100 index up 1,239.12 points or 1.14 percent to hit a new intraday high of 109,478.08.
The impressive rally reflects a week of rapid growth for PSX, which crossed the 100,000 mark just seven days ago.
According to the State Bank of Pakistan (SBP), Pakistan’s total liquid foreign reserves reached $16.6 billion as of November 29, 2024.
These reserves include $12 billion held by the State Bank, which increased by $620 million during the week, driven by an official inflow of $500 million from the Asian Development Bank (ADB).
Additionally, the Saudi Fund for Development (SFD) extended the term of the $3 billion deposit for another year to December 5, 2024.
The expansion followed a meeting between Prime Minister Shahbaz Sharif and Saudi Crown Prince Mohammed bin Salman during the “One Water Summit” in Riyadh.
Meanwhile, another reason for the market’s rise is the inflation rate, which fell to 4.9 percent in November, its lowest level since 2017, giving room for further monetary easing. This marks a sharp decline from last year’s all-time high of 38% and is well below the State Bank’s target range of 5-7%.
Analysts widely expect the SBI to cut interest rates by at least 200 basis points at its December 16 meeting, bringing the total cut since June to 900 bps.
As the PSX approaches the 110,000 point, market analysts are optimistic about continued growth.
With strong economic indicators, rising reserves, and the prospect of a significant rate cut, capital markets are positioned for continued momentum in the final weeks of 2024.