The Pakistan Stock Exchange (PSX) saw a record-breaking surge on Wednesday as investor sentiment grew, fueled by expectations of an interest rate cut by the State Bank of Pakistan (SBP). The benchmark KSE-100 index gained 736.10 points (0.81%), reaching an intra-day high of 91,600.19.
Samiullah Tariq, Head of Research at Pakistan-Kuwait, attributed the rally to falling yields, limited investment options due to taxation, and strong corporate earnings, driving bullish market sentiment.
The SBP’s Monetary Policy Committee (MPC) is expected to announce a 200 basis points rate cut, lowering the policy rate to 15.5% during its November 4 meeting. Saad Ali, Director of Research at Intermarket Securities, noted that the rally is supported by reduced political uncertainty, allowing the government to focus on IMF reforms.
Experts believe the KSE-100 index rally is also fueled by strong liquidity as interest rates decline, along with stable global oil prices. In the last MPC meeting, the SBP enacted its largest rate cut since April 2020, reducing the key rate by 200bps to 17.5% and marking a 450bps reduction since June.
Speculation suggests the SBP may continue rate cuts, potentially up to 400bps by December, due to falling inflation. The Pakistan Bureau of Statistics reported inflation at a year-low of 6.9% in September, down from 9.6% in August, boosted by stabilizing commodities, energy markets, and a steady currency. This trend has reignited foreign investment interest in Pakistan’s capital market.
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