Stock prices in Pakistan surge by 3 percent weekly, outperforming other financial assets
Pakistan Stock Exchange (PSX) Closes Week at Near Record Highs
The Pakistan Stock Exchange (PSX) continued its impressive run, closing the weekend session at 145,382.79 points on Friday, according to Topline Securities. The benchmark KSE-100 Index reached near record levels, reflecting robust trading volumes and high traded value, signaling strong market participation and liquidity.
The PSX market crossed the 140,000-point barrier this week, marking a significant milestone. The average daily value traded during the week was Rs47 billion ($165 million), with an average daily traded volume of 653 million shares.
The 3.08% increase in the PSX over the past week was driven by several key factors. Sustained buying activity by mutual funds and local institutional investors, supported by fresh capital inflows, created strong upward momentum in equity markets. Positive corporate earnings results, which exceeded market expectations, boosted investor confidence and contributed significantly to the rally.
Optimism about circular debt resolution and power sector reforms, improving market sentiment and reducing risks associated with the energy sector, also played a role. Policy stability and continuity of the IMF program underpinned confidence in fiscal and structural reforms in Pakistan’s economy. Favorable macroeconomic developments, including a 7% year-on-year rise in remittances, helped strengthen foreign currency reserves, despite a widening trade deficit.
Reports of US firms planning investments in Pakistan’s energy sector reinforced the market’s positive outlook. Geopolitical developments such as higher US tariffs on Indian goods, which analysts expect might benefit Pakistan’s export sectors, particularly textiles, also contributed to the rally.
However, it's important to note that profit-taking occasionally trimmed gains, but overall market sentiment remained bullish due to these combined economic and corporate factors.
It's worth mentioning that the remittance inflows for Pakistan in July were $3.2 billion, down 6% month-on-month but up 7% year-on-year. The Pakistan trade deficit for July was $2.8 billion, a 44% increase year-on-year. Foreign exchange reserves held by the central bank decreased by $72 million on a weekly basis, reaching $14.2 billion as of August 1.
In conclusion, the PSX's performance continues to outshine other asset classes, with the gain largely attributed to buying by mutual funds on inflow of funds. The positive trends are expected to continue, given the favourable economic indicators and ongoing reforms.
- The impressive run of the Pakistan Stock Exchange (PSX) is not only reflected in its near record highs but also in the robust trading volumes and high traded value, indicating strong market participation and liquidity.
- Positive developments in the economy, such as favorable macroeconomic indicators, ongoing reforms, and investment from US firms in the energy sector, have contributed to the rally on the PSX.
- The increase in the PSX over the past week was driven by a combination of factors, including strong buying activity by mutual funds, positive corporate earnings results, and policy stability supporting the economy.
