Shares at the Pakistan Stock Exchange (PSX) surged by over 400 points in intraday trading on Thursday, driven by a positive shift in investor sentiment following Moody’s recent rating upgrade.
The KSE-100 index gained 421.02 points, or 0.54%, reaching 78,413.80 points from the previous close of 77,992.78 points by 10:41am.
Awais Ashraf, Director of Research at AKD Securities, attributed the market upturn to Moody’s rating upgrade, which improved external liquidity conditions and alleviated concerns about the delayed approval from the IMF board.
On Wednesday, Moody’s upgraded Pakistan’s local and foreign currency issuer ratings to Caa2 from Caa3, citing improvements in macroeconomic conditions and slightly better government liquidity and external positions.
Yousuf M. Farooq, Director of Research at Chase Securities, observed that the KSE-100 index had been under pressure recently due to uncertainties surrounding the IMF program. He expressed confidence that Pakistan would be able to refinance its debt or secure additional financing from foreign banks, even at higher costs.
The government and the IMF agreed on a 37-month loan program in July, pending approval from the IMF’s executive board and confirmation of necessary financing assurances from Pakistan’s development and bilateral partners.
Farooq noted that the market appears undervalued relative to the 10-year bond yield, which is currently 1.5% below the earnings yield of the KSE-100 index. He anticipated that the index would eventually adjust to reflect a lower risk-free rate.
