The benchmark KSE-100 index jumped 5.5 percent or 2,269 points in less than 10 minutes of its opening, breaching the 5 percent movement barrier that triggers a suspension of trading for an hour.
By Staff Reporter
KARACHI: Pakistan’s main stock index jumped the most ever at the opening trade on Monday, triggering a one-hour trading halt, after the country secured a $3 billion stand-by arrangement from the International Monetary Fund (IMF) to support its dollar-starved economy.
“Pakistan (stock) market opens at all-time record high,” analyst Mohammed Sohail at Topline Securities said in a tweet.
The benchmark KSE-100 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, dealers said.
The index resumed trading at 10:37 a.m. local time (0537 GMT) and was up 4.8 percent at 43,766 points by 11:15 a.m.
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.
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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