The stock market started the week on a positive trajectory, buoyed by easing political uncertainty, improving macroeconomic indicators, easing inflation, and expectations of a supportive monetary policy.
Investor sentiment also drew strength from a robust current account surplus and plans to strengthen Pakistan’s presence in international financial markets.
Sentiment further was buoyed by the conviction of former Prime Minister Imran Khan and his wife, Bushra Bibi, in a long-awaited verdict last Friday, which provided a sense of closure and lowered political temperature.
The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index climbed 929.77 points, or 0.81%, to reach an intraday high of 116,201.85 on Monday. The market also recorded a low of 115,732.88, as trading activity reflected optimism and anticipation of further economic stability.
“Market reacting positively to the political development last Friday, of Khan not being acquitted, as it now sees low political temperature in the near term,” said Muhammad Saad Ali, Director of Research at Intermarket Securities Ltd.
“Politics was a key reason why the market had stalled in the past couple of weeks,” he added.
Accountability Court Judge Nasir Javed Rana sentenced Khan and his wife to 14 and seven years in prison, respectively, while also imposing substantial fines. This politically significant verdict ended weeks of speculation, alleviating market concerns about prolonged political instability.
Finance Minister Muhammad Aurangzeb announced the government’s plan to launch Panda Bonds by June 2025 to strengthen Pakistan’s engagement with China’s capital markets.
Speaking in an interview, he said that Pakistan plans to raise approximately $200 million from Chinese investors through the issuance of the Panda Bond. He added that this initiative is part of a broader strategy to transition the economy towards export-driven growth and sustainable balance of payments.
The move aligns with the government’s ongoing efforts to expand the tax net and meet International Monetary Fund (IMF) conditions under the $7 billion Extended Fund Facility (EFF).
According to a statement issued by the Prime Minister’s Office on Sunday, Prime Minister Shehbaz Sharif has also highlighted the importance of digital growth, welcoming Pakistan’s inclusion in the World Economic Forum (WEF) and Digital Cooperation Organisation’s (DCO) Digital Foreign Direct Investment Initiative (DFDII).
The first project under this initiative will focus on digital infrastructure and services exports, aiming to attract significant Foreign Direct Investment (FDI).
The country’s net FDI rose by 31%, reaching $1.124 billion in the first five months of the current fiscal year.
Adding to the optimism, the State Bank of Pakistan (SBP) reported a current account surplus of $1.2 billion for the first half of FY25, marking the highest surplus in 15 years. The surplus was bolstered by increased remittances and export growth. For December alone, the surplus stood at $582 million, a 109% year-on-year increase.
On the inflation front, the Sensitive Price Indicator (SPI) recorded a year-on-year increase of 1.16% for the week ending January 16, the lowest rate in months. A weekly decline of 0.39% in SPI reflects easing prices in key food categories.
Analysts expect this moderation in inflation to influence the SBP’s monetary policy, with potential revisions to the current policy rate of 13%, further boosting investor sentiment.
Last week, the KSE-100 Index gained 2,025 points (+1.8% week-on-week) to close at 115,272 points, reflecting attractive valuations and institutional value hunting.
With supportive economic indicators and expected monetary easing, the market is likely to maintain its positive momentum in the coming sessions. However, political uncertainty and volatile crude oil prices remain key risks for investors.
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