Pakistan stocks surge on hopes of IMF deal resumption

By Staff Reporter

KARACHI: Pakistan’s benchmark stock index soared to its highest level in more than a month as investors bet that the government’s budgetary measures would revive the stalled International Monetary Fund (IMF) program.

The KSE-100 index climbed as much as 41,151.89 points, its highest since May 19, before paring some gains to trade up 2.63 percent to 41,117.54 as of 12:25 p.m. local time.

The rally was driven by optimism that the IMF would resume its $6.7 billion loan program for Pakistan after the government announced Rs215 billion of additional taxes and lifted all restrictions on imports last week.

Analyst Raza Jafri at Intermarket Securities said the pending ninth IMF review, which seemed to have been written off by markets, was now seeing “fresh hope” after the government tweaked the budget and removed import restrictions.

Prime Minister Shehbaz Sharif also met with IMF Managing Director Kristalina Georgieva thrice on the sidelines of the Paris Summit, signaling progress in the talks.

Following PM Sharif’s meeting with the IMF chief, the State Bank of Pakistan (SBP) withdrew all restrictions on imports to facilitate the industrial sector.

“The market expects good news in the coming days,” said Fahad Rauf, head of research at Ismail Iqbal Securities Ltd. in Karachi. “If a staff-level agreement is inked then Pakistan would come closer to completing the review.”

The IMF program, which began in 2019, has been on hold since November last year due to the differences over funding to bridge the debt financing gap.

The surge in stocks was broad-based, with all sectors trading in the green. Oil and gas, automobile, cement, and banking stocks were among the top performers.

“The change of sentiment comes amid a series of developments in recent days, which indicates that the IMF deal is moving in a positive direction,” said Sana Tawfik, an analyst at Arif Habib Ltd., one of Pakistan’s largest brokerage firms.

Some analysts cautioned that the rally may not last long as the economic outlook remains uncertain amid the pandemic and political challenges.

“The market would remain positive till the fiscal year-end, unless negative news dents the sentiment,” Rauf said. “The year-end phenomena are also playing a part.”