Shares at the Pakistan Stock Exchange (PSX) traded positively on Wednesday, with stocks gaining 500 points in early morning trade. Analysts attribute this rally to strong company results and clarity on government formation.
The benchmark KSE-100 index rose by 507.79 points, or 0.8%, to reach 63,726.88 by 11:46am, up from the previous close of 63,219.09.
Tahir Abbas, head of research at Arif Habib Limited, credits the market’s momentum to the “robust results and dividend announcements by companies.” He notes a 64% year-on-year increase in profitability and a 40% year-on-year increase in dividends for KSE-100 index companies during the last quarter of December.
The formalization of provincial governments and clarity on the federal government have also boosted investor confidence, according to Abbas.
Shahab Farooq, director of research at Next Capital Limited, attributes the positive trend to reduced political uncertainty and an increase in Pakistan’s international bonds. He also mentions the positive impact of reports that China rolled over $2 billion of debt.
Sana Tawfik, deputy head of research at Arif Habib Limited, notes a rise in the refinery sector due to refinery policy news and anticipates a price hike in the fertilizer sector. Overall, she sees a positive outlook as the country moves towards forming a new government, which is crucial for negotiating a new IMF program. Reports of Chinese loan rollovers have also contributed to positive market sentiment.