The Pakistan Stock Exchange (PSX) continued its positive momentum on Monday on the back of the International Monetary Fund’s (IMF) letter of intent and other expected inflows.
According to the PSX website, the benchmark KSE-100 index gained 764.25 points, or 1.78 per cent, to close at 43,621.82 points. It reached an intraday high of 43,659.04 points shortly before the close. Head of Research at Intermarket Securities, Raza Jafri, said the index opened on a strong note because of positive developments over the weekend including the letter of intent (LOI) from the IMF and assurance of further support from Saudi Arabia.
“The market is still quite cheap on valuations,” he added. Ahsan Mehanti of Arif Habib Corporation attributed the bullish trend to the rupee’s strong recovery and reports of renewal and a further addition to a package from Saudi Arabia. He also attributed it to the finance minister’s announcement of a $1 billion investment from the United Arab Emirates in the PSX as well as the IMF’s letter of intent.
Finance Minister Miftah Ismail had told Dawn that an LOI had been received early on Friday from the IMF for the revival of the programme under the staff level agreement (SLA) and memorandum of economic and fiscal policies (MEFP) signed last month. “We are going through the LOI, would sign and send [it] back to the IMF anytime soon and look forward to (executive) board meeting later this month for approval,” he said.
The IMF has convened a meeting of its executive board on August 29 to approve a bailout package for Pakistan, including disbursement of about $1.18bn, before the close of the current month. The move follows the completion of the $4bn in bilateral financing from four friendly nations and would pave the way for immediate disbursement, expected to be in Pakistan’s account before the end of working hours on August 31.
Sources said the board meeting was convened after Saudi Arabia, the United Arab Emirates, Qatar and China confirmed to the IMF that they had completed arrangements for $4bn in bilateral financing to Pakistan, which was the last hitch to the bailout package after completion of all the prior actions agreed under the SLA. The IMF board’s clearance was expected to reverse continuously depleting foreign exchange reserves, strengthen the Pakistani rupee and support balance of payments.