Shares at PSX surge to all-time high on rating agencies’ dovish outlook

Bulls continued their stampede post-Eid as shares at the Pakistan Stock Exchange (PSX) climbed more than 1,700 points in intraday trade to reach an all-time high, which analysts attributed to the “dovish outlook” of rating agencies for the country.

The benchmark KSE-100 index gained 1738.81, or 2.27 per cent to stand at 78,445.58 — an all-time high — from the previous close of 76,706.77 points at 1:30pm.

Mohammed Sohail, chief executive of Topline Securities, attributed the bullish momentum to “positive sentiments continue amid hope that new budget will help [in] securing [a] long-term IMF deal”.

Raza Jafri, chief executive of EFG Hermes Pakistan, said, “The market is pricing in the favourable news over the Eid holidays, including Fitch’s dovish view on inflation outlook and the proposed reduction in electricity tariffs for industries.”

“The bout of modest foreign selling pressure this month, possibly due to FTSE rebalancing, also appears to be largely behind us,” he added.

Yousuf M Farooq, director research at Chase Securities, highlighted the upward trajectory was due to “’declining fixed income yields, no additional capital gains and dividend taxes in the budget, rationalisation of energy tariffs, improving economic sentiment and reduced uncertainty over the balance of payments situation”.

Additionally, Farooq highlighted that “comments from Fitch and Moody’s have all contributed to today’s market rally”.

Awais Ashraf, director research at AKD Securities, echoed similar sentiments.

He said, “Positive statements from global credit rating agencies Moody’s and Fitch about Pakistan’s budget and economic outlook bolster investor confidence in the government’s strategy to address fiscal and external imbalances.”

Shahab Farooq, director of research at Next Capital Limited, noted that the index had crossed the 78,000 level “amid positive comment by the two leading rating agencies”.

Additionally, he attributed the climb to factors such as the “strong possibility of signing of SLA with the IMF for a new larger and longer programme, inflation expected to remain low at around 12pc for June’24, rethinking by the government on some tax measures announced in the budget and institutional buying”.

More to follow