KARACHI: The Pakistan Stock Exchange (PSX) continued its positive momentum on Friday, with the KSE-100 index gaining over 800 points during intraday trading, reflecting growing investor confidence amid government efforts to address the country’s circular debt crisis.
The benchmark KSE-100 surged by 801.61 points (0.7%) to reach 114,514.78 at midday, compared to the previous close of 113,713.17. By the end of the session, the index settled at 114,398.69, marking a gain of 685.52 points (0.6%).
Yousuf M. Farooq, Director of Research at Chase Securities, attributed the bullish sentiment to reports that the government had successfully persuaded banks to provide Rs1.25 trillion in loans at interest rates below 11% to help settle circular debt in the power sector.
A report by Arif Habib Limited noted that the government has made significant progress in resolving Rs1.5 trillion worth of circular debt. Under the plan, Rs1.25 trillion will be financed through new bank loans, while Rs250 billion has already been allocated in the federal budget.
The loans will be offered at an interest rate 0.90% below the Karachi Interbank Offered Rate (KIBOR). Initially, the government had aimed for a fixed interest rate of 7-8%, but this was not finalized.
Additionally, declining global oil prices have reshaped inflation expectations, further boosting investor interest in cyclical stocks, according to Farooq.
He added that investors are closely watching the ongoing IMF review, as a successful review could trigger a strong market breakout, ending the two-month consolidation phase.
On Thursday, the PSX rally was also fueled by expectations of further monetary easing and falling international oil prices, which hit multi-year lows, lifting investor sentiment.
Reports of a high-level government meeting focused on circular debt resolution also contributed to the upbeat mood in the market.
