ISLAMABAD, November 25, 2024: The Pakistan Stock Exchange (PSX) initially opened in the red on Monday, as Pakistan Tehreek-e-Insaf (PTI) launched its “do-or-die” protest march towards Islamabad, prompting a lockdown of the federal capital.
Despite a rocky start, the market reversed its course, ending the day on a positive note, with significant gains fueled by the country’s improving macroeconomic indicators.
The KSE-100 index increased by 1,519.24 points, or 1.55%, going up to 99,317.47 points during intra-day trading.
The market had dipped by more than 600 points at the opening bell but quickly recovered, reflecting investor confidence in Pakistan’s economic fundamentals.
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Muhammad Saad Ali, Director of Research at Intermarket Securities, attributed the early decline to political uncertainty. “Politics is a major factor in the dip in early trading,” he said, adding that profit-taking after the index neared the 100,000-point mark on Friday and the rollover week for futures investors contributed to the selling pressure.
Despite the political turmoil and strict security measures in Islamabad and other major cities, market participants pointed to stronger macroeconomic data and optimism over declining lending rates as factors that supported the rebound.
Analysts noted that the market’s resilience was driven by solid economic fundamentals, including a current account surplus of $349 million in October, improving foreign exchange reserves, and the International Monetary Fund’s (IMF) positive review of Pakistan’s economic performance.
In a key development, the State Bank of Pakistan (SBP) raised Rs350 billion through an auction of Pakistan Investment Bonds (PIBs), exceeding its target of Rs300 billion.
Yields on the five-year and ten-year PIBs fell to their lowest levels since March 2022, further boosting investor sentiment.
The cut-off yield for the two-year zero-coupon bond dropped by 19 basis points to 13.0%, while yields for the three-year bond remained steady at 12.5%. Yields for the five-year and ten-year bonds also decreased by 9bps and 14bps, respectively.
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The current account surplus in October, coupled with the reduction in fixed-income yields, helped strengthen investor confidence.
This was the third consecutive monthly surplus, driven by a 7% month-on-month and 24% year-on-year increase in remittances. Pakistan’s foreign exchange reserves also hit a two-year high, further boosting market optimism.
As the country’s foreign reserves approach the $11 billion mark, local mutual funds have increasingly shifted investments from fixed-income securities to equities, contributing to the benchmark index’s 20% rise since September.
The PTI protest, led by party leaders and supporters, is centered around demands for the repeal of the 26th Constitutional Amendment, restoration of democracy, and the release of detained political workers.
Despite a heavy government crackdown, caravans of protesters have continued to make their way towards Islamabad, defying court orders and tight security measures.
The timing of the protest coincides with the upcoming visit of the Belarusian president and escalating political tensions across Pakistan.
The government has imposed communication restrictions in major cities, including Islamabad and Karachi, as part of efforts to contain the demonstrations.
Despite these challenges, the KSE-100 index remains on track to reach historic highs, with favorable economic indicators and strong liquidity keeping equities as an attractive investment option.
