KARACHI: Investor sell-offs put some initial pressure on the Pakistan Stock Exchange (PSX) last week, but as good economic news came to pass, the market recovered. A significant decision was made by the State Bank of Pakistan (SBP), which lowered its policy rate by 200 basis points to 17.5%, a level not seen since April 2020. Market players appreciated the 25–119 basis point decline in KIBOR (Karachi Interbank Offered Rate) rates that resulted from this rate decrease across a range of tenors.

Regarding the International Monetary Fund (IMF), the administration achieved notable strides, as Pakistan’s agenda was formally included in the IMF’s September 25, 2024 board meeting. SBP reserves increased significantly by $30 million to $9.5 billion, and the value of the Pakistani rupee rose by 0.15% to Rs278.2 against the US dollar.

Monday’s trading started off on a negative note as the KSE-100 index dropped by more than 280 points, primarily due to declines in international equities and unrest in local politics.

Tuesday, however, saw a spike of more than 650 points, driven by an increase in remittances, which increased by 40% year over year to $2.9 billion in August 2024. Wednesday’s market volatility, which saw it plummet 634 points due to political unpredictability, gave way to optimism on Thursday as anticipation of additional SBP policy rate cuts drove the index up by over 350 points.

The KSE-100 index increased by more than 300 points on Friday as a result of market excitement following the SBP’s rate decrease announcement and the confirmation of the timing of the IMF board meeting. With a weekly gain of 435 points, or 0.55%, the PSX concluded the week at 79,333 points (WoW).

Wadee Zaman, an analyst at JS Global, pointed out that the KSE-100 experienced a brief breach of the 80,000-point mark, but end-of-week selling pressure prevented it from holding. The index increased by 0.6% WoW. The Foreign Portfolio Investment (FPI) reported a net outflow of $8.2 million for the week, indicating that foreign investors continued to be net sellers despite these advances.

The announcement that the IMF Executive Board will convene in September 2024 to approve the $7 billion Extended Fund Facility (EFF) marked a significant milestone. The Federal Board of Revenue also made vague references to a Rs650 billion mini-budget that would increase the GST on tractors and the withholding tax on real estate in addition to tougher penalties for tax evaders.

As of September 5, 2024, SBP’s foreign reserves have climbed to $9.5 billion, the most in 26 months. August 2024 saw just less than $3 billion in remittances, which is a record for this amount of money sent out each month. Furthermore, August 2024 saw a 13% year-over-year increase in four-wheeler sales, with varying company outcomes.