The Pakistan Stock Exchange (PSX) reached a historic milestone on Thursday, as the KSE-100 Index surged past the 113,000-point mark for the first time. The market’s rise was driven by positive economic indicators, growing investor optimism, and expectations of significant monetary easing.
The benchmark index soared by 2,381.21 points, or 2.15%, reaching an intraday high of 113,191.42, marking another significant achievement in the market’s ongoing rally.
Sana Tawfik, Head of Research at Arif Habib Limited, attributed the rise to increased liquidity, which has been fueled by successive interest rate cuts, shifting investor focus from bonds to equities. She also noted that the IMF program and other economic measures have led to significant improvements in inflation and foreign exchange reserves.
Pakistan’s Current Account Deficit (CAD) saw a sharp 79% decline, narrowing to $217 million in the first two months of FY2025, with August recording a surplus of $29 million. Exports are expected to hit $33 billion by the end of FY2025, supported by a stable exchange rate and strong growth in key trade partners.
Remittances are projected to reach $33.5 billion in FY2025, aided by government measures and reduced global inflation. The government’s efforts to encourage remittance flows, including transaction rebates, are contributing to economic stability.
The reduction in Treasury Bill (T-bill) yields by up to 100 basis points has also spurred expectations of monetary easing. Analysts predict that the State Bank of Pakistan (SBP) may cut its policy rate by up to 200 basis points during its meeting on December 16, following a drop in inflation to 4.9% in November, the lowest since April 2018.
The government’s revision of profit rates on National Savings Schemes (NSS), particularly a 250 basis point drop in the Savings Account rate, is expected to redirect funds into equities, further boosting market activity.
With strong economic activity, such as a 62% year-on-year rise in passenger car sales and a $530 million loan from the Asian Development Bank for power infrastructure, the market continues to reflect growing investor confidence. Saudi Arabia’s extended financial support has further strengthened foreign reserves and improved investor sentiment.
As expectations for further rate cuts remain high, the market momentum is expected to continue, supporting the PSX’s growth.
