Ahmed Khan Malik

Pakistan Stock Exchange (PSX) became the second-best performing market in July on the back of renewed economic confidence caused by the approval of the much-needed loan programme by the International Monetary Fund (IMF).  PSX – considered to be a key barometer of the state of the country’s economy – went through some tumultuous phases in the last one year when economic indicators were on the declining trend, denting the confidence of investors.  Though during the last one year, the stock market showed some resilience when good news emerged on the economic front, successive negative developments again pushed it to historic lows.  July 2023, however, proved a milestone in the history of the stock market when the index breached the single-day historic gains after Pakistan and IMF signed the Stand-By Arrangement (SBA) on June 30, 2023. 

The IMF pact not only shore up the country’s foreign exchange reserves, but also renewed the investors’ confidence in the equity market as it gained 15% in terms of dollars, ranking it the second best performing market in the world as reported by Bloomberg.  The market experienced record rally, achieving net gains of 16% in July as Benchmark KSE-100 Index breached the 47,000 points barrier at the end of the month after about two years. Stock market players attributed the continued bullish trend in the market to the IMF deal, dollar inflows from friendly countries and somewhat falling inflation. Moreover, clarity on smooth transfer of power to caretaker government also provided the much-needed impetus to the stock market.  The stock market always reacts to developments on the country’s political and economic fronts.

This is evident from the present state of the shares market where everyone likes to invest in the stocks to achieve higher gains. This was not the case a few months ago when investors were pulling out their capital to put in the more attractive heavens like gold and foreign currency.  The renewed confidence of the investors in the stock market reflects their confidence in the country’s economy.  “As the investment climate is being improved after the formation of the civil-military Special National Facilitation Council, Pakistan is turning into an attractive destination for domestic and foreign investors,” said Chief of Army Staff Gen Asim Munir while speaking at the Pakistan Minerals Summit.  The growing interest of friendly countries to invest in Pakistan’s mining, agriculture and IT sectors and plans to set up a green-field refinery in Balochistan are all indications of a positive economic landscape of the country.

Credit: INP-WealthPk