KARACHI (Web Desk) – The Pakistan Stock Exchange reached a new high on Thursday when the benchmark KSE-100 Index breached the 68,000 ceiling and closed the session at 68,416.78 after a gain of 660.75 points, or 0.98 per cent.
It reflects the fact that investors are buoyed by a decline in inflation and the possible interest rates cuts as the stocks are currently in another recording-breaking spree.
The latest surge comes after inflation measured by consumer price index (CPI) declined for a third consecutive month at a more than expected rate in March and was recorded at 20.7pc on year-on-year basis.
Earlier on Wednesday, the KSE-100 Index had surged 1.30pc and set a new milestone by crossing the 67,000 mark for first time in its history, as investors and businessmen around the country are anxiously awaiting reduction in the skyrocketing cost of doing business.
The decrease in the March CPI was sharper than what the International Monetary Fund (IMF) and the central bank had projected, as they said that the inflation would slow in the last quarter of the current financial year.
However, there is a caveat. But the latest and the future energy tariff hikes as well as the increase in fuel prices could have damaging effects by propelling the input and transportation costs, which may be reflected in food prices.
Meanwhile, there is another factor boosting the investors’ confidence: the progress made in the privatisation of PIA – the national flag carrier – which will automatically increase the likelihood of another deal with the International Monetary Fund (IMF).
But one has to remember that most the top performing stocks are still undervalued when the historic high these had reached in 2016-17, meaning that the rising benchmark isn’t still being reflected in market capitalisation.
However, drastic steps in the shape of policy and institutional reforms are required to attract foreign investment and make Pakistan an economic hub, which help achieve the goal of boosting the market capitalisation.
Read more: Pakistan must go for privatisation, ending untargeted subsidies: World Bank
This very point has been mentioned in a latest report issued by the World Bank as the Washington-based institution recommended at variety of measures to revive Pakistan’s economy.
In a latest development, Saudi Arabia has invited Prime Minister Shehbaz Sharif for performing Umrah, sources say, as he is expected to meet Crown Prince Mohammed bin Salman during his stay in the kingdom.
The invitation comes at a time when Pakistan is desperate for foreign investment to revive the flagging economy which has been hit hard by rupee devaluation, persistent inflation and record-high interest rates.