Pakistan Stock Exchange enters new territory on the promised Saudi investment
Business
KSE-100 Index climbs over 70,000 hurdle
- Mohammed bin Salman and Shehbaz Sharif on Monday reaffirmed their commitment to expedite the first phase of a new investment package by Saudi Arabia
- Investors have been banking on possible rate cuts after three consecutive months of decline in inflation
KARACHI (Web Desk) – The Pakistan Stock Exchange on Tuesday had another profitable session, as the benchmark KSE-100 Index reached another milestone by jumping over the 70,000 mark after Saudi Arabia promised to investment $5 billion in the country at the earliest.
Investors are waiting anxiously for the inflows from the Gulf States which haven’t been materialised yet. However, the latest commitment made by Saudi Crown Prince Mohammed bin Salman may break the deadlock and set a precedent for others.
Earlier on Monday, Pakistan and Saudi Arabia reaffirmed their commitment to expedite the first phase of a new Saudi investment package during a meeting between Prime Minister Shehbaz Sharif and Mohammed bin Salman in Makkah.
Read more: Shehbaz, MBS agree to expedite first phase of $5bn Saudi investment in Pakistan
By the time trading was closed for the day [the last session before the Eid holidays], the KSE-100 Index settled at 70,314.71 by gaining 694.73 points, or 1.0 per cent, after touching an intraday high of 70,677.29.
The IMF QUESTION
In Islamabad, Finance Minister Muhammad Aurangzeb, who took oath as senator after being elected to the Upper House on a technocrat seat from Punjab on Tuesday, told reporters that a delegation would leave for the US to talks with the international Monetary Fund (IMF) for another bailout package.
During an informal chat, he said they would discuss the modalities and basic structure of a new programme with the IMF, as Shehbaz has repeatedly stated that Pakistan badly needs financial assistance from the Washington-based lender.
The visit coincides with the annual spring meetings of IMF and World Bank from April 15 to 20 in Washington, where he will lead Pakistan’s delegation.
The UPWARD MOVEMENT
The market has already been moving in a record-shattering upward trajectory after the consumer price index (CPI) data for March showed a more than expected decline in inflation, which represented a continuation of the trend witnessed since the start of the current calendar year.
It gave hope to the investors that the State Bank of Pakistan (SBP) may go for the much-needed interest rate cuts required for reviving the crippled economy by the high cost of doing business.
However, the rising power and gas tariffs as well as fuel prices are expected to influence the central bank’s decision about any rate cuts as the hikes will automatically sustain and fuel inflation.
These fears are further heightened by the fact that futures traders have reduced bets on how much the Federal Reserve will cut rates this year to the lowest level since October, LSEG data showed on Monday, amid evidence of continued strength in the US economy.
Another factor contributing to the positive markets sentiments is the progress being made in the privatisation of PIA – a process that is to be completed in June – thus paving the way for a long-term and bigger deal with the international Monetary Fund (IMF).
