Shares at the Pakistan Stock Exchange (PSX) climbed by 1,300 points on Wednesday ahead of the budget announcement on June 10.
The KSE-100 index climbed 923.71, or 0.77 per cent, to stand at 121,374.58 from the last close of 120,450.87 at 1:31pm. The index closed at 121,798.86, with a gain of 1347.99 points or 1.12pc.
Sana Tawfik, head of research at Arif Habib Limited, attributed the bullish momentum to the news of the approval of a new financial package between Pakistan and Asian Development Bank (ADB).
The ADB approved an $800 million programme to strengthen fiscal sustainability and improve public financial management in Pakistan, according to a statement issued by the Philippines-based lender.
The statement read that subprogramme 2 of the “Improved Resource Mobilisation and Utilisation Reform Programme” includes a policy-based loan of $300m, and ADB’s “first ever policy-based guarantee” of up to $500m, which is expected to mobilise financing of up to $1 billion from commercial banks.
Additionally, Tawfik noted that stock valuations were trading at an “attractive level” due to the correction phase witnessed at the stock market earlier this week.
“Lastly, there is also some institutional buying which has increased liquidity,” she added.
Yousuf M. Farooq, director of research at Chase Securities, said, “The market has hit an all-time high as participants brush off any negative budget-related news flow.”
He explained that expectations were building that economic stability would persist and interest rates will gradually trend downward, allowing stock market price-to-earning (PE) ratios to rerate upwards.
“We believe the market is gradually entering the second phase of the bull run — transitioning from the accumulation phase to the public participation or momentum phase — marked by increasing public involvement, rising stock market volumes, gradual PE multiple expansion, and clearer signs of economic recovery,” he stated, adding that investor confidence, media attention, and new IPO activity were expected to grow.
“Measures such as reduced taxation that boost corporate earnings, along with adherence to IMF guidelines, will further reinforce confidence,” Farooq highlighted, noting that steps towards mass digitisation would also propel stock market sentiment.