PSX-100 index makes history, tops 37,000 points

0
187

 

The Pakistan Stock Exchange (PSX) rallied over 500 points to reach an intra-day high of 37360.88 points on Friday, hours before the Pakistan Muslim League-Nawaz government unveiled its budget for the upcoming fiscal year 2016-17.

The index was up 441 points, or 1.2 per cent, reaching 37,281 points an hour before the closing.

According to Topline Securities CEO Muhammad Sohail, the major reason for the optimism in the market is the expectation that the upcoming budget will go easy on the stock market in terms of taxes.

“The general expectation is that unlike last year’s budget, this year the government is not going to levy additional taxes on the stock market,” he said.

Sohail went on to say the surge was also a result of the positive net foreign buying over the past couple of days.

“Data from the past three days shows Pakistani stocks were on foreign investors’ radar which is why the index is rising today,” Sohail added.

The upcoming MSCI review on June 14, when discussion on upgrading Pakistan’s status to an emerging market will take place, has also been bolstering stock prices for the past few weeks.

Market players anticipate a positive outcome from the meeting, with an improved status expected to bring in fresh foreign investment and opportunities for Pakistan in the future, Sohail said.

MSCI, a US-based provider of stock market indexes and portfolio analytics, had hinted last year that Pakistan’s inclusion in the Emerging Markets category will be discussed in June 2016.

The bullish market these days testifies investors’ growing confidence in Pakistan and its industries. The stock exchange trampled all previous records on Friday as 100 index slew the 37,000 mark.

According to experts, low interest rate and investor-friendly policies in the federal budget 2016-17 are being held responsible for the growth.

The record hike came around five months after the government merged stock exchanges in major cities to form a single bourse. Analysts had welcomed the development of merging Lahore, Karachi and Islamabad’s exchanges foreseeing positive results.

The State Bank cut the already-reduced interest by 0.25 per cent in May. The central bank had maintained six per cent rate in the two monetary policies before the one announced last month.

The bank said the economic growth in the fiscal year ending June 2016 was likely to exceed last year’s 4.2 percent but miss the 5.5 percent target.

The State Bank stated that the annual consumer inflation rate increased to 4.17 per cent in April from previous month’s 3.94 per cent.

Economists are of the view that the country needs to expand by six per cent a year to absorb new entrants.