KARACHI (Web Desk) – The Pakistan Stock Exchange touched a new high on Thursday as the benchmark KSE-100 Index crossed the 67,000 mark for the first time in its history, after the government showed its seriousness on the privatisation of lossmaking state-owned enterprises (SOEs) – boosting the investors’ confidence.
It meant that foreign and local institutions opted for buying stocks in sectors like commercial banks, cement, chemical, oil and gas exploration and marketing companies.
The latest record came against Wednesday’s closing of 66,547.78. Previously, the KSE-100 Index had touched an all-time high of 66,426.78 on December 12.
Meanwhile, the bullish stocks follows FTSE Russell’s decision about its merging market (EM) indexes on Wednesday, in which it said Pakistan is still on watch for a possible downgrade from "secondary emerging" to "frontier" market and an update to its status will be announced by July 5, 2024.
However, the move is a temporary relief given the fact it was feared that the FTSE would downgrade both Pakistan and Egypt given the economic crisis they are facing, resulting in unprecedented currency devaluation, inflation and interest rates.
By the time session was closed for the day, the KSE-100 Index had been recorded at 67,142.12 after a gain of 594.34 points, or 0.89 per cent.
With the IMF (International Monetary Fund) pressing Pakistan – which is desperate for another longer and bigger package from the Washington-based lender – hard to go ahead with the privatisation process, the national airlines’ board of directors on Tuesday had approved the privatisation and restructuring plan for the entity.
Earlier on the same day, the federal cabinet approved an 11-member board of PIA Holding Company in a significant steps towards its privatisation. It means the PIA’s liabilities and assets will be transferred to the holding company, which will be registered with the Securities and Exchange Commission of Pakistan (SECP).
The progress in PIA’s privatisation means that the chances of engaging the IMF for new deal have increased manifold.
And on Thursday, Dunya TV reported that the government had reached a deal on term sheet with the commercial banks from which the PIA obtained a massive loan of around Rs270 billion.
However, any reluctance in hiking the energy prices may prove a hurdle, given that Prime Minister Shehbaz Sharif has expressed his annoyance over the increase in gas tariffs at a time when the marketing companies have sought another massive raise, as the government is juggling with the two opposites – the IMF pressure and the need to protect from the rising prices.
Read more: Gas price hikes angers Shehbaz, as he orders a forensic audit
Both the businesses and the domestic consumers have been calling for reducing the gas prices [as well as electricity tariffs], but the IMF and the marketing companies are thinking otherwise.
The industrialists have warned that the move will fuel the inflation and kill the prospects of curbing the trend, which is essential for interest rate cuts, after the high borrowing costs paralysed the economy.
By further increasing the cost of doing business, the proposed gas tariff hikes would result in closure of industrial units when Pakistan urgently requires revival of national economy, they say.
It’s a developing story. Details to follow