Pakistan stocks boom on Saudi investment, declining inflation
Business
With rate cut hopes growing, prospects another IMF programme are also boosting the market
- There are reports that Crown Prince Mohammed bin Salman will visit Pakistan next week
KARACHI (Web Desk) – Boosted by the prospects of massive Saudi investment, the benchmark KSE-100 Index on Monday surged by over 1.50 per cent during intraday trading, as investors are now also confident that the central bank will soon start interest rate cut cycle and another IMF programme is very much on the horizon.
After touching an intraday high of 73,060.74, the KSE-100 Index closed at 72,764.24 with a net gain of 862.15 points, or 1.20pc.
Also on Monday, Saudi Arabia’s Deputy Investment Minister Ibrahim Al Mubarak said his country wanted to see Pakistan economically strong and considered it most suitable for investment.
It is certainly a great news for the stocks which have remained undervalued since witnessing a high in 2017 in terms of market capitalisation, as different sectors – energy, agriculture, technology and mining being the main – can see a much-needed foreign investment.
PAKISTAN INFLATION
The latest gains come after the benchmark index jumped by 1244.45 points or 1.76pc during the last session on Friday last week after the consumer price index (CPI) for April was up 17.3pc – the lowest since May 2022.
It means annual inflation was a decline for the fourth consecutive month and remained lower the current record high interest rates of 22pc in April like the previous month of March, meaning that the State Bank of Pakistan may opt for starting rate cuts at the next meeting scheduled for June 10.
Although market correction also played a role in the trend witnessed on Friday, the continuation of this latest surge shows that the investors are expecting an economic revival amid a declining inflation and imminent investment from Saudi Arabia.
IMF PROGRAMME
Meanwhile, the IMF remains an important factor in Pakistan, affecting not only the government policies but also businesses and ordinary people. And the latest confirmation about the future deal talks by the world’s top lender obviously also boosted the market.
On Sunday, the Bretton Woods Institution said a team was expected to visit Pakistan this month to discuss a new programme, ahead of Islamabad beginning its annual budget-making process for the next financial year.
Pakistan last month completed a short-term $3 billion programme, which helped stave off sovereign default, but the government of Prime Minister Shehbaz Sharif has stressed the need for a fresh, longer term programme.
"A mission is expected to visit Pakistan in May to discuss the FY25 budget, policies, and reforms under a potential new programme for the welfare of all Pakistanis," the IMF said in an emailed response to Reuters.
THE MBS FACTOR
At the same time, it is also reported that Saudi Crown Prince Mohammed bin Salman will visit Pakistan this month, as the kingdom has been on an investment spree around the globe, thus expanding its role as a major global player.
Read more: Pakistan means business, aid no more a focus: Musadik Malik
No wonder his visit coupled by the Saudi investment will help Pakistan build its image as an attractive destination for investors after years of political instability and economic crisis.
The reason is simple: Saudi Arabia has remained an important player in global politics. But the policies followed by MBS – the abbreviation used for the crown prince – to diversify his country’s economy and make the kingdom an economic hub means the world has started seeing him as a guide.
