The equity market surged sharply on Thursday, closing at a fresh record high, as investor sentiment was boosted by a landmark Strategic Mutual Defence Agreement signed between Pakistan and Saudi Arabia.
The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index settled at 157,953.46 points, a gain of 1,775.65 points, or 1.14%, from its previous close of 156,177.81.
During the session, the index reached an intraday high of 158,082.55 points, climbing by 1,904.74 points, or 1.22%. The session’s low was recorded at 156,978.85 points, which was still 801.04 points, or 0.51%, higher than the previous day’s close.
“The news about the defense partnership has brought excitement across the board. This is a major macro rerating game changer that can pour more liquidity and reduce risk premium,” said AAH Soomro, an independent investment and economic analyst. “The index may head upwards without corrections,” he added.
On Wednesday, Pakistan and Saudi Arabia formalized a historic Strategic Mutual Defence Agreement, pledging to treat any aggression against one country as aggression against both. The pact was signed during Prime Minister Shehbaz Sharif’s state visit to Riyadh, where he was received by Crown Prince and Prime Minister Mohammed bin Salman at Al-Yamamah Palace.
The agreement, as stated, reflects a joint commitment to enhance bilateral security ties and contribute to regional and global peace. It aims to further develop defence cooperation and strengthen joint deterrence against any aggression. Crucially, the agreement stipulates that any aggression against one country shall be considered aggression against both.
The government also successfully raised Rs195 billion from the auction of Market Treasury Bills (T-bills) on Wednesday, surpassing its target of Rs175 billion. However, it rejected bids for the 10-year floating-rate Pakistan Investment Bond (PIB) as investors demanded higher returns.
The T-bill auction attracted participation worth Rs1.07 trillion, with yields remaining largely stable. The cut-off yield on a one-month paper eased by 1 basis point (bp) to 10.7445%. The three-month bill yield remained unchanged at 10.8502%, while the six-month paper edged down 1bp to 10.8376%. The 12-month yield also stayed steady at 10.9999%.
The State Bank of Pakistan (SBP) on Monday held its policy rate steady at 11% for the third consecutive meeting, citing inflation concerns exacerbated by devastating floods. Since June 2024, the central bank had slashed rates by a total of 1,100 bps but kept them unchanged in June, July, and now September.
In comparison, during the previous session on Wednesday, the KSE-100 Index closed nearly flat, down by a marginal 3.12 points to 156,177.82 from 156,180.94. The day’s high was 157,196.59 points, while the low was 155,960.36 points.
