KARACHI (Web Desk) – Pakistani stocks on Monday continued with their record-breaking streak as the benchmark KSE-100 Index surged 1.76 per cent and climbed over the 69,000 barrier for the first time in its history, as investors remained buoyant amid possible rate cuts by the central bank.
The latest gains also comes after Saudi Crown Prince Mohammed bin Salman hosted Prime Minister Shehbaz Sharif an iftar dinner in Makkah at a time when it is expected that Riyadh will soon announce around $1 billion investment in Reko Diq – one of the largest copper and gold reserves in the world.
By the time trading was closed for the day, the KSE-100 Index settled at 69,619.98 with a net gain of 1,203.20 points after touching a high of 69,720.03, as foreign investors both individually and institutionally went for buying.
The meeting between the Saudi crown prince, who is commonly known as MBS, and Shehbaz could pave the way for investment in multiple sectors ranging from mining and energy to agriculture.
Read more: Shehbaz expected to meet MBS as Saudi Arabia invites him for Umrah
Investors are desperate for foreign investment to revive the economy which has been crippled by record-high energy prices and interest rates, propelling the cost of doing business to an unsustainable level.
Any progress in this regard will not only help the rupee to appreciate but also boost the value of undervalued stocks through the anticipated buying spree, as investors won’t miss the opportunity provided by the lower values.
But there is a serious question mark when it comes to the increased hopes that the State Bank of Pakistan will start rate cuts after inflation measured by the consumer price index (CPI) witnessed a continuous decline during the last three months, especially the more than expected slide in March.
The reason is the imminent increase in fuel prices as well as power and gas tariffs – a move will further sustain the inflationary pressure – under the IMF conditions given the fact that Islamabad is desperate to get another package from the Washington-based lender.
At the same time, the latest US data has dampened the expectations about the possible US rate cuts by the Federal Reserve, which is causing a gold price rally due to the speculative buying.