Moaaz Manzoor

The Pakistan Stock Exchange rally, driven by optimism over the smooth sailing of the ongoing IMF long-term bailout programme, underscores investor confidence, but sustaining this momentum depends on the government’s commitment to structural reforms and fiscal discipline, reports WealthPK.

Following the initial surge, the KSE-100 index continues to sustain gains, reflecting investor expectations of economic stabilisation and improved liquidity conditions. With foreign inflows set to ease external debt concerns, analysts believe that market sentiment remains largely positive, though structural reforms will be key to sustaining this trend.

Speaking with WealthPK, Ali Najib, Head of Sales at Insight Securities, emphasised that the IMF’s Staff Level Agreement (SLA) marks more than just an injection of funds — it reinforces Pakistan’s broader economic roadmap. “With $1 billion secured under the Extended Fund Facility (EFF), bringing total disbursements to $2 billion, and an additional $1.3 billion available under the Resilience and Sustainability Facility (RSF), investor confidence remains strong,” he stated.

He pointed out that the market had already factored in the agreement, but its earlier-than-expected approval acted as a fresh catalyst for gains, with the KSE-100 closing at 117,806.74 in the latest session. “Beyond immediate stock market movements, the agreement strengthens Pakistan’s macroeconomic position. Structural reforms in taxation, energy, and governance tied to the IMF programme are expected to support fiscal consolidation and boost foreign exchange reserves,” Najib noted.

He suggested these measures will help control inflationary pressures and mitigate external vulnerabilities, ensuring long-term economic stability. Syed Zafar Abbas, Manager at Zahid Latif Khan Securities, noted that broader policy commitments are shaping the market’s performance. “The SLA is not just about liquidity support — it signals Pakistan’s dedication to economic discipline, which is essential for attracting foreign investment and stabilising the rupee,” he explained.

Additionally, the government’s revision of its inflation forecast to 1% for March strengthened positive sentiment, increasing participation from both domestic and institutional investors, he added. “While the stock market’s resilience signals optimism, experts caution that sustained economic stability depends on policy consistency. IMF-backed measures offer a short-term boost, but the real test lies in the government’s execution of structural reforms.

The rally is encouraging, but investor confidence will hinge on how well the government sticks to reform commitments,” Abbas noted. While the PSX continues to thrive on strong investor optimism, Pakistan’s ability to implement reforms effectively and navigate external economic challenges will shape its long-term trajectory.

Credit: INP-WealthPk