Islamabad: Pakistan’s key stock gauge rose to a six-year high on Friday amid optimism that the strengthening currency may help ease inflationary pressures.
The KSE-100 Index rose 0.9 per cent to 50,673.04, taking this month’s gain to almost 10 per cent in the second-best performance among more than 90 global equity indexes tracked by Bloomberg. The gauge still trades at a one-year forward price-to-earnings ratio of 3.2, versus 8.8 for the MSCI Frontier Markets.
“The recent recovery in Pakistan’s rupee, the secondary debt market hinting at peak rates and inflation readings will help channel fresh funds back to equities at current very attractive multiples,” said Faisal Bilwani, head of international sales at Alfalah CLSA Securities. The market will likely “remain in limelight” after the KSE-100 topped the 50,000 mark after six years, Bilwani said.
Stocks in Pakistan have soared 23 per cent after an initial deal with the International Monetary Fund in June for a $3 billion loan program to help the nation avoid a default. The rupee has rebounded about 10 per cent from a record low in September and is the best performing currency among those tracked by Bloomberg.
National elections expected late January, which will be critical to lure investments to the country, and finalizing a new IMF program are key for the rally to extend into 2024, he said.
“Valuations are still cheap and a successful IMF review can potentially unlock new highs for Pakistan equities,” said Adnan Khan, head of international sales at Intermarket Securities. “We remain positive.”