PSX surpasses 45,000-mark, touches 15-month high

KARACHI: The Pakistan Stock Exchange's (PSX) benchmark KSE-100 index rallied on Tuesday after positive cues as the cash-strapped nation secured much-needed $2 billion in funds from Saudi Arabia.

The market rallied as the index closed the day at 570.67 or 1.28% to jump to 45,155.79 points, up from the previous close of 44,585.12 points.

The market gained 3,703 points or 8.9% since the staff-level agreement with the International Monetary Fund (IMF) for a $3 billion Stand-By Arrangement (SBA), according to Arif Habib Limited. 

Fitch credit rating agency also Monday upgraded Pakistan's long-term foreign currency issuer default rating to CCC from CCC-, a positive sign for a country reeling under its worst economic crisis.

"Market optimism has been reinforced by the news of Saudi money, Fitch credit rating upgrade, and lack of any hindrance in the IMF talks with the political parties last weekend," capital market expert Saad Ali told Thenews.com.pk.

The analyst also anticipated that the market would witness a rise in points throughout the week.

In a statement, the rating agency said the upgrade reflected the country's improved external liquidity and funding conditions following a staff-level agreement with the International Monetary Fund (IMF), but warned that the fiscal deficit still remained wide.

The Saudi inflows came after Islamabad signed the short-term IMF deal on June 30 under a standby arrangement that will disburse $3 billion over a nine-month period, subject to approval by the IMF's board, which is meeting on July 12.

Multilateral and bilateral funds were a major obstacle in the way of Pakistan's deal with the IMF — which remained stalled for more than nine months and expired.

The SBA has now provided the nation with a breathing space, avoiding a sovereign default, and helped the government streamline fiscal policies.

Speaking to Thenews.com.pk, Arif Habib Limited's Head of Research Tahir Abbas said the market sentiment has been generally positive since the IMF deal, but today's uptick can be attributed to the Saudi inflows.

"Tomorrow, the IMF board meeting will take place; Pakistan can receive up to $1.2 billion from the IMF; the market's sentiment will remain positive in the coming days," he said.

With sky-high inflation and foreign exchange reserves barely enough for a month of controlled imports, analysts say Pakistan's economic crisis could have spiralled into a debt default in the absence of the IMF bailout.

With the IMF deal in place, Pakistan can now unlock other external financing.

Fitch said local authorities expect $25 billion in gross new external financing in FY24, against $15 billion in public debt maturities, including $1 billion in bonds and $3.6 billion to multilateral creditors.

The South Asian nation has seen also seen severe political uncertainty since former prime minister Imran Khan was ousted through a no-confidence motion in April last year.

In a bid to ensure that the programme's measures are implemented in the lead-up to the elections due in October, the lender's team met all mainstream political parties to seek support and consensus for the SBA.

Khan's Pakistan Tehreek-e-Insaf said he gave his support for the deal.