Stocks spike on IMF’s thumbs-up to Pakistan’s Q1 performance

Stocks on Monday hit more than a six-month high following International Monetary Fund’s (IMF) thumbs-up to country’s first quarter performance, paving way for the release of first tranche under a 39-month loan deal worth $6 billion with Pakistan, dealers said.

Pakistan Stock Exchange’s (PSX) benchmark KSE-100 shares index jumped 2.29 percent or 824.94 points to close at 36,803.10 points level, while KSE-30 spiked 2.56 percent or 428.37 points to end at 17,181.88 points level.

Saad Hashmi, executive director at BMA Capital Management, said, “The day started on a positive note after the first IMF assessment concluded well, with Pakistan likely to attain the next tranche of $450 million”.

“Other positive developments included: reduced political noise from Azadi March, an increase in SBP’s (State Bank of Pakistan) reserves by $443 million to $8.4 billion, and a cumulative year-to-date inflow of $518 million in government securities from carry trades.”

Positive momentum was thus observed across the board with highlight of the day being commercial banks, oil and gas exploration and production, and independent power producers with most of the shares closing the day on their respective upper circuits, Hashmi said.

Of 380 active scrips, 304 gained, 59 lost, and 17 were unchanged. The turnover stood at 282.944 million shares compared to 210.573 million in the previous session.

Muzamil Aslam, Managing Director Next Capital, said, “The market gained over 2 percent because of the first quarter IMF review, which would pave way for release of $450 million tranche, the government decision to release funds for development projects, shortening their procedure, and stringent efforts to fulfill FATF (Financial Action Task Force) rules by checking jewelers and real estate transactions”.

“Last week the IMF team concluded review on Pakistan economy and stated that all performance criteria for end-September were met despite difficult conditions.”

The IMF staff emphasised on sustaining the policies of fiscal prudence and asked to continue with the efforts to broaden tax base, Aslam added.

Ahsan Mehanti at Arif Habib Corporation said, “Stocks closed record high as investors weighed easing political noise, MSCI emerging market status quo, and IMF affirmations over achievement of First Quarter Performance Criteria by good margins”.

Foreign inflows, surging foreign exchange reserves, and rupee stability led to the bullish close at PSX, Mehanti said.

Samiullah Tariq, director research at Arif Habib, said, “The market strengthened further on the back of positive IMF comments endorsing measures adopted by the government and giving a satisfactory note on first quarter review”.

Besides this, increase in foreign exchange reserves by over $400 million in a week also boosted the sentiment, while overall economic indicators also encouraged new wave of buying, Samiullah added.

The highest gainers were Colgate Palmolive, up Rs91.40 close at Rs1980/share, and Bata Pakistan, up Rs56.69 to finish at Rs1785.38/share.

Highest losers were Phillip Morris Pakistan, down Rs116.44 to close at Rs2212.73/share, and Pakistan Tobacco, down Rs99.99 to close at Rs2400.01/share.

Bank of Punjab recorded the highest volumes with a turnover of 35.924 billion shares, while it gained Rs0.46 to end at Rs10.41/share. Fauji Cement posted the lowest turnover at 6.398 million shares; however, it gained Rs0.69 to end at Rs15.96/share.