Behind Stock Exchange’s Bullish Surge
At the end of 2022, benchmark KSE-100 index lost 9.4% in rupee value compared to the beginning of the year. Will the PSX cross 80,000 this year?
The stock market is expected to reach 80,000 points by the end of the year, thanks to a positive trend that started last month. It has already gone up by 52.6% compared to December 2022. Not only that but the equity market has made a strong comeback with a 56% increase in returns in 2023. This is due to several big-picture factors affecting the market, including the positive IMF reviews, centralized decision-making, and foreign interest.
But what can prevent Pakistan from reliving the stock market events of 2013 or even 2022?
The policy rate is seen as a key driver of positive sentiments in the stock market. The most recent treasury bill auction took place at a 3% lower rate than previous auctions, indicating a potential reduction in the policy rate. Analysts specifically forecast a significant 7% decrease, bringing the policy rate down to 15%. On one hand, this shift could prompt banks to reassess their strategy of generating interest-based income, as a lower net interest margin is anticipated. But on the other hand, businesses could finally find it more feasible to borrow loans and increase their investments.
Furthermore, the announcement of elections and consequent stability has had a positive impact on business sentiment in the country. Overall, policymakers need to work hard to help capital markets grow sustainably, ensuring they remain a dependable source of funding for companies and a trustworthy option for investor savings to prevent vulnerability in the market.
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https://www.dawn.com/news/1797704/whats-up-at-the-stock-market
Completely different perspective. Might be good to go beyond the headlines