Islamabad, 03 July 2024, (GNP): The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 index rose by 739.71 points, or 0.93%, reaching 80,292.59 points during the intraday session, compared to the previous day’s close of 79,552.89 points.
On Wednesday, stocks surged beyond the 80,000 threshold, driven by increased investor interest in state-owned enterprises (SOEs) and anticipation of a rate cut.
Speaking to media EFG Hermes Pakistan’s CEO Raza Jafri attributed the gain to a surge in buying of SOEs like the National Bank of Pakistan (NBP) and Oil and Gas Development Company (OGDC), driven by press reports highlighting efforts towards privatization, strategic stake sales, and addressing longstanding issues.
Jafri emphasized that these developments have invigorated investor confidence, as the government’s initiatives to tackle legacy problems and streamline operations in these enterprises are seen as steps towards enhancing their profitability and efficiency.
This comes within increasing hopes of sizeable interest rate cuts in [second half of 2024] and timely entry into an International Monetary Fund (IMF) programme,” he added
The government’s privatization plan spans two to three years and will be implemented, according to Finance Minister Muhammad Aurangzeb, who spoke following the National Assembly’s passage of the FY25 budget last week.
Minister for Privatization Aleem Khan stated that the federal government aims to privatize around 24 SOEs in the coming years, with Pakistan International Airlines expected to be the first enterprise to undergo privatization.
Meanwhile, Intermarket Securities Director of Research Saad Ali attributed the surge to optimism about the IMF program and the continuation of macroeconomic recovery after the budget was passed without significant obstacles or major amendments.
He added, “The market continues to re-rate from still low valuations and prospect of lower interest rates in future.”
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The day before, stocks closed significantly higher at 79,552.89 points, driven by expectations of improved earnings in the half-year results of SOEs in the oil sector.
Meanwhile, Alpha Beta Core CEO Khurram Shehzad noted that the budget’s passage, which aligns with most of the IMF’s conditions for the new, larger, and longer program, has boosted investor confidence in economic reforms and increased economic stability. Shehzad emphasized that this alignment signals the government’s commitment to structural reforms and fiscal discipline, which are crucial for attracting foreign investment and sustaining economic growth.
In addition to the optimism surrounding the IMF program, analysts believe that the government’s clear roadmap for privatization and its efforts to address legacy issues in SOEs are pivotal in restoring investor trust. The anticipated privatization of key enterprises like Pakistan International Airlines is seen as a significant step towards reducing the fiscal burden and improving the efficiency of these entities.
Furthermore, the ongoing macroeconomic recovery, reflected in steady improvements in key economic indicators, has created a conducive environment for market growth. The combination of these factors has led to a positive market sentiment, encouraging both domestic and international investors to increase their stakes in Pakistani equities.
