PSX rebound on Saudi financial deal
Pakistan may still need to seek IMFs support to provide a level of comfort to foreign investors
KARACHI (Dunya News) – Pakistan Stock Exchange (PSX) climbed by nearly where the index climbed by 1556 points or four percent on Wednesday, hours after Saudi Arabia pledged to provide Islamabad with $6 billion in financial assistance to shore up a widening balance of payments crisis.
The market since its opening landed in the plus column and in just ten minutes of its opening scored 885 points where all the shares showed green signs. The index touched the session high of 1586 points, but closing witnessed at 1556 points, ten points below the early high. The index on June 5, 2017 scored the biggest gain in the single session in the history, finishing at 1566 points.
Saad Bin Ahmed, head of equity sales at Arif Habib said that the market sentiment has turned positive on the back of deferred oil payment facility offered by Saudi as well as the extended forex support of $3 billion.
Institutional investors are still resisting the temptation and buying cautiously, whereas retail clients are taking bets, eyeing the index to cross 40,000 points in a short while. Foreigners have not been a major seller as yet and it is likely that the positive sentiment to prevail a couple of days, with the risk of selling or profit booking on Friday.
Mohammad Sohail, Chief Executive Officer of Topline Securities said that Prime Minister’s next visit will be to China (scheduled for Nov 3) where another relief package cannot be ruled out given China’s billions of dollar investment in CPEC.
“We believe that despite these developments, Pakistan may still need to seek IMF’s support to provide a level of comfort to foreign investors and lending agencies”, he added.
Though the bailout package will be much lower than what we were earlier anticipating which should come with a less strict measures in our view, Sohail remarked.
Shumalia Badar head of research at Ismail Iqbal Securities said that the market shot upwards upon news of a USD 6 billion Saudi Package to support Pakistan s external position. Disappointing earnings announcements by Allied Bank and MCB Bank could not dent sentiments. “We expect the market to gain some more before profit taking sets in”, she said.
