Pakistan Stock Exchange Surges on IMF Deal
The staff-level agreement with the IMF and the potential reserves at the Reko Diq copper and gold mine have boosted investor confidence, driving the KSE-100 index to new heights. The government's commitment to reforms and addressing climate-related challenges will be crucial in maintaining stability and achieving long-term recovery.
The KSE-100 index surged by 1,139.14 points, or 0.98%, to settle at 117,772.31 on Wednesday, driven by investor optimism following a staff-level agreement with the International Monetary Fund (IMF) and reports of potential reserves at the Reko Diq copper and gold mine.
The IMF deal, which includes a $1.3 billion loan under the Resilience and Sustainability Facility, boosted market confidence, with commercial banks and oil and gas exploration companies performing strongly. The KSE-100 index reached an intra-day high of 118,221 points, and the government's reduction in March 2025 inflation forecast to 1% also contributed to the surge. United Bank, Oil and Gas Development Company (OGDC), Pakistan Petroleum, Mari Petroleum, and Meezan Bank led the gains, while Bank Alfalah, Engro Fertilisers, and Service Industries were the major drags.
Foreign investors bought shares worth Rs650.9 million, and the trading volume increased to 356.7 million shares. The market is expected to continue trending higher, potentially reaching the 120k range. Pakistan has made significant progress in restoring macroeconomic stability and rebuilding confidence over the past 18 months, with inflation declining to its lowest level since 2015 and financial conditions improving.
However, despite this progress, the economy remains vulnerable to risks, including potential macroeconomic policy slippages, driven by pressures to ease policies. The IMF has warned that sticking to the reforms agenda is crucial to maintain stability, especially in the face of emerging geopolitical shocks, tightening global financial conditions, and rising protectionism.
The government must prioritize sustainable growth over rapid growth and address climate-related challenges to achieve long-term recovery. With the IMF deal and the potential reserves at the Reko Diq copper and gold mine, the Pakistan Stock Exchange is expected to continue its upward trend, providing a much-needed boost to the country's economy.