The Pakistan Stock Exchange (PSX) continued its positive momentum on Monday, with the benchmark KSE-100 Index climbing 2,105.29 points, or 1.89%, to reach an intraday high of 113,456.46.
The strong performance marked a robust start to the week, fueled by renewed investor confidence and a favorable economic environment.
The market’s upward trajectory was driven by a combination of factors, including optimism surrounding Pakistan’s economic recovery, easing geopolitical tensions, and supportive monetary policies. Recent clarity on the taxation framework for the banking sector has also provided additional support, addressing investor concerns over taxation procedures.
The federal government’s recent approval of an income tax ordinance, which revises the method for calculating bank profits and raises the tax rate on the banking sector from 39% to 44%, is expected to generate an additional Rs70-75 billion in revenue by the end of December. This move is seen as a positive step towards stabilizing the fiscal situation and boosting investor sentiment.
Although foreign investor transactions remained on the net selling side, with outflows of $6.8 million—mainly from the banking sector—the selling pressure was offset by strong local buying from individual investors and domestic banks/DFIs, which helped sustain the market's upward momentum.
In addition, the government’s successful auction of Treasury Bills (T-bills), raising Rs913 billion, provided further support to the market. While this fell short of the Rs1,200 billion target, it highlighted the continued demand for government securities.
Despite a slight dip in foreign exchange reserves, which fell by $228 million to $11.9 billion due to external debt repayments, Pakistan's economic fundamentals remain strong. November saw a 16.91% decrease in imports year-on-year, while exports rose by 17.56%, leading to a current account surplus of $729 million—the highest in a decade. Additionally, foreign direct investment (FDI) saw a 31% year-on-year increase during the first five months of FY2024-25.
With a return of 78% for the KSE-100 Index, making it the second-best performing stock market globally, analysts remain optimistic about the PSX’s outlook for the rest of the year. Continued political stability, liquidity, and pro-growth economic policies are expected to maintain the market’s positive momentum in 2025.
