PSX Gains Momentum Amid Improved Economic Indicators
The Pakistan Stock Exchange (PSX) started the week with a significant surge, reflecting growing investor confidence and an improved macroeconomic outlook. The benchmark KSE-100 Index climbed 3,471.05 points (3.12%), reaching an intraday high of 114,822.22 on Monday.
Key Drivers of Growth:
- Clarity in Banking Sector Taxation:
- The government’s recent revisions to the tax framework for banks, including a shift from an ADR-linked profit calculation to a fixed slab and a tax rate increase from 39% to 44%, provided much-needed stability.
- The move is expected to generate Rs70-75 billion in revenue by December and has restored investor confidence.
- Positive Economic Indicators:
- A current account surplus of $729 million in November, the highest in a decade, and significant year-on-year growth in exports (17.56%) and foreign direct investment (31%) reflect an improving economic trajectory.
- A 16.91% year-on-year drop in imports further strengthens the balance of payments.
- Monetary Policies & Liquidity:
- The government raised Rs913 billion through Treasury Bill auctions, though it fell short of the Rs1,200 billion target.
- Stable cut-off yields on T-bills and steady liquidity levels have kept market sentiment positive.
- Global Recognition:
- Over the past 18 months, the PSX has delivered an impressive 177% return in USD terms, making it the second-best performing stock market globally.
Market Performance:
- Recovery After Volatility: The benchmark index recovered 1.68% week-on-week despite prior turbulence.
- Investor Activity:
- Net foreign investor selling amounted to $6.8 million, mainly in the banking sector.
- Domestic individual investors and banks/DFIs acted as net buyers, mitigating the impact of foreign outflows.
PSX CEO Optimism for 2025:
PSX CEO Farrukh Sabzwari expressed confidence in sustained growth, contingent on political and economic stability. Key highlights from his remarks:
- Stability is essential for achieving fiscal goals, privatisation success, and institutional reforms.
- The PSX aims to broaden its investor base by targeting women and youth while increasing the number of listings.
- A continuation of current economic policies could make 2025 a year of growth.
Outlook:
With improving macroeconomic fundamentals, policy clarity, and a stable political environment, analysts expect the PSX to maintain its positive momentum into 2025. Investor optimism remains high, driven by robust returns, economic recovery, and a pro-growth environment.
