By Staff Reporter
KARACHI: Pakistan’s main stock index surged to a record single-day trade on Monday after the country secured a $3 billion stand-by arrangement from the International Monetary Fund (IMF) to support its dollar-starved economy.
The benchmark KSE-100 index gained 2,446 points or 5.9 percent to close at 43,899 points, marking its best daily performance ever. The index has gained 9.57 percent or 3,834 points in the last three sessions, boosted by the IMF deal.
The IMF and Pakistan reached a staff-level agreement on Friday on a new nine-month programme, subject to approval by the IMF’s executive board, expected by mid-July.
The deal is seen as a lifeline for Pakistan, struggling to complete the ninth review of its previous bailout programme and shore up its dwindling foreign exchange reserves.
The agreement also paves the way for additional funding from other sources and provides an economic roadmap ahead of a transition to a caretaker government and elections next year.
Dealers said the benchmark index jumped 5.5 percent or 2,269 points in less than 10 minutes of opening, breaching the 5 percent movement barrier that triggers a suspension of trading for an hour.
Brokerage Topline Securities said it was “the most bullish day” at Pakistan equities as far as positive closing goes. “A 2,446 points gain was the highest ever gain (in points term) since the KSE100 index’s inception in November 1991,” the brokerage said in a post-market note.
The brokerage said the ‘Bull Run Market Halt’ signals bullish aggressiveness and further price appreciation in the days to come in stocks at PSX.”
“Over 40 percent of the index constituents were hit their limit up for the day and there was no seller even at their upper circuit too.”
Investors snapped up shares across sectors, especially in auto, cement, banking, oil, and gas exploration and marketing companies.
“The market is reacting positively to the IMF deal, which has eased the pressure on the external account and the currency,” said Samiullah Tariq, head of research at Pak Kuwait Investment Company.
He said the index could touch 44,000 points in the near term but expected some consolidation after the initial surge.
Analyst Mustafa Pasha at Lakson Investments said the new IMF programme had two benefits for Pakistan: getting $3 billion instead of $1.1 billion and staying in an IMF programme during the political transition.
“It also means chances of receiving additional funding from bilateral/multilateral sources increase. Thus, the fear of a severe clampdown on imports, sharp currency depreciation, and default has been averted.”
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