KSE-100 Index up 1.23pc, dollar grows stronger amid high demand
Business
Market is buoyant by the reports about Pakistan inking investment deals with the UAE
KARACHI (Web Desk/Dunya News) – The stock market continued its movement in upward trajectory on Monday – the first business day of the week – with the benchmark KSE-100 Index at one point jumping 1.30 per cent to reach a new high, as the prospects of imminent foreign investment got brighter with Caretaker Prime Minister Anwaarul Haq Kakar's visit to the United Arab Emirates (UAE).
On the other hand, the US dollar was traded at Rs286 in official exchange rate after gaining 63 paisa and for Rs287 in open market with a 50 paisa surge, as the money market hasn’t been able to meet the demand amid low supply.
Interbank closing #ExchangeRate for todayhttps://t.co/nT0SqHnOwF#SBPExchangeRate pic.twitter.com/Ff2mRQgloA
— SBP (@StateBank_Pak) November 24, 2023
During his stay, Kakar and his team are expected to sign a number of memorandums of understanding (MoUs) on different subjects including the investment in energy, port operations, waste water treatment, food security, logistics, mining, aviation, and banking and financial services.
By 2:19pm, the KSE-100 Index was recorded at 59,854.25 after moving up by 767.90 points against the previous closing of 59,086.35.
However, it settled at 59,811.34 after a 1.23pc, or 724.99 points, increase when the session was closed for the day where the overall trading volume for the benchmark index was over 276 million shares.
Earlier, a successful review of the $3 billion stand-by arrangement by the International Monetary Fund (IMF) gave a clear message that the government would have to deal with issues like circular debt and reforming the energy sector.
At the same time, privatisation of loss-making state-owned enterprises is also on the cards, pointing to an imminent inflow of foreign investment besides providing the much-needed opportunity to the local investors to explore new ventures.
Foreign investment in sectors like oil and gas, mining, banking, aviation and agriculture means the listed companies will see their stocks moving up for a considerable period after years of undervaluation.
Meanwhile, another factor which will help the market in long-term will be documentation of economy, thus forcing investors to use more traditional and legal means, like the stocks, for earning profits.
Read more: Major changes on the cards for boosting tax-to-GDP ratio to 15pc
Amid a visible and consistent improvement in macroeconomic indicators coupled with an end to the series of rate hikes followed by possible rate cuts, the local investors have already been rushing to the stocks after dwindling property prices and a stronger rupee due to the government action against market manipulators made them think about more profitable avenues.
This trend is making the stock market more and more lucrative for investors when compared with unproductive real estate sector, which first witnessed stagnation and later went into a decline.
Various factors are responsible for this, but the main reason is overinvestment in both commercial and residential properties – considered a safe haven, especially amid the economic turmoil Pakistan is facing.
Moreover, the rising stocks will certainly also discourage investment in safe haven currencies like dollar and assets like gold.
One must recall that Pakistan has one of the worst, if not the worst, ratio of people investing in stocks when compared with the rest of the world. The reason is simple: real estate, gold and safe haven dollar provide an easy way to earn profit.
This mindset has resulted in ignoring the manufacturing as well as research and innovation – the pre-requisites for a developed and sustainable economy – both individual and institutional levels.
