The Pakistan Stock Exchange (PSX) experienced a significant boost on Wednesday, with the benchmark KSE-100 index surpassing the 80,000 mark due to increased investor interest in state-owned enterprises (SOEs).
The KSE-100 index reached 80,292.59 points during intraday trading, marking an increase of 739.71 points or 0.93% from the previous close of 79,552.89 points.
In an interview with Geo.tv, Raza Jafri, CEO of EFG Hermes Pakistan, attributed the gains to a surge in buying of SOEs such as National Bank of Pakistan (NBP) and Oil and Gas Development Company (OGDC). “Press reports indicating a push on privatization, strategic stake sales, and addressing legacy issues have fueled this buying spree,” Jafri explained.
Jafri also highlighted the growing optimism for substantial interest rate cuts in the second half of 2024 and a timely entry into an International Monetary Fund (IMF) program as contributing factors to the market’s performance.
Finance Minister Muhammad Aurangzeb announced that the government’s privatization plan, which spans two to three years, will be executed following the National Assembly’s approval of the budget for FY25 last week.
Minister for Privatization Aleem Khan stated that the federal government plans to privatize around 24 SOEs in the coming years, with Pakistan International Airlines expected to be the first enterprise to be privatized.
Saad Ali, Director of Research at Intermarket Securities, cited optimism about the IMF program and the continuation of macroeconomic recovery following the smooth passage of the budget as key reasons for the market’s surge. “The market continues to re-rate from still low valuations and the prospect of lower interest rates in the future,” Ali said.
The previous day, stocks closed significantly higher at 79,552.89 points, driven by expectations of better earnings in the half-year results by SOEs in the oil sector.
Khurram Schehzad, CEO of Alpha Beta Core, noted that the budget’s alignment with most of the IMF’s conditions for a new, larger, and longer program has boosted investor confidence in economic reforms and the overall stability of the economy.
The PSX’s robust performance underscores the market’s positive response to the government’s economic policies and strategic initiatives aimed at revitalizing key sectors through privatization and financial reforms.
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