New Delhi: Poor Pakistan has finally made a record. Due to the help this debt-ridden neighboring country got from the International Monetary Fund (IMF), its stock market became a rocket.It started rising rapidly.Within no time, it left India’s stock market behind. Pakistan’s benchmark share index (Karachi 100 Index) has crossed the one lakh mark for the first time.
Karachi 100 index currently stands at 101357 points. This is the first time that the Karachi 100 Index has crossed the one lakh mark. On the other hand, India’s stock market is far behind. The main index Sensex (BSE Sensex) is at 79802 points. In such a situation, Karachi 100 index has gone far ahead of Sensex.
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Why did the Pakistani stock market rise?
There are many reasons for the rise in Pakistan’s stock market.the biggest reason for this is the $7 billion bailout that Pakistan received from the IMF. On the other hand, inflation is also decreasing in Pakistan. Due to this, Karachi 100 index has also increased.
According to the Times of India, the Karachi 100 index has gained 25% as the IMF deal in September. In dollar terms, this year the market has risen by more than 50%.
Political riots did not have much impact
Currently, riots are taking place in Pakistan regarding the release of former Prime Minister Imran Khan. Due to this reason, the Karachi 100 index had recently fallen by about 4 percent. But these protests did not have much impact.After some time, the market again gained momentum and crossed the figure of one lakh.
150 percent increase in 17 months
According to mohammad Sohail, CEO of topline Securities, the IMF bailout and some other things have won the confidence of investors. Due to this, the market has increased from Rs 40 thousand to Rs 1 lakh in 17 months, that is, there has been an increase of 150 percent in 17 months.
Sohail said that the market has also improved due to fall in inflation and interest rates. Actually,Pakistan had cut interest rates by a record 250 basis points to 15% in early November. this led to a rapid decline in the inflation rate.
Where did the Sensex take the hit?
If we talk about the Indian stock market, a game like snakes and ladders is going on in it. Sometimes the Sensex goes up a lot at once and then it crashes in the next day or two-three days. The Sensex has fallen by 7 percent in the last two months. The biggest reason for the decline was the withdrawal of foreign investors.
While pakistan’s Karachi 100 index has jumped 150 percent in 17 months, the Sensex has increased only 23 percent in the same period. If seen in such a situation, Pakistan’s stock market is growing rapidly.
How does the performance of Pakistan’s Karachi 100 Index compare to other regional markets like India’s Sensex?
Interview: Unpacking the Surge of Pakistan’s Stock Market with Mohammad Sohail, CEO of Topline Securities
Q: Welcome, Mr. Sohail. The recent surge in the Karachi 100 Index has certainly caught the attention of international investors. Can you share what has driven this rapid increase?
A: Thank you for having me. the primary catalyst for the Karachi 100 Index reaching new heights, crossing the significant one lakh mark, has been the $7 billion bailout from the International Monetary Fund (IMF). This financial support has restored investor confidence significantly.Moreover,we have seen a notable decline in inflation,which has also positively impacted the stock market.
Q: It’s remarkable that the Karachi 100 Index has risen by over 150% in just 17 months. How do you interpret this growth in the context of regional markets, especially compared to India’s Sensex?
A: Yes, the growth has been considerable, characterized by a 25% gain since the IMF deal was finalized in September alone. In comparison, India’s Sensex has only grown by about 23% during the same period. This stark difference highlights the bullish sentiment in Pakistan’s market, contrasting with the volatility we often observe in the Indian market, especially with the recent 7% decline in the Sensex due to foreign investor withdrawal.
Q: Political instability frequently enough impacts stock markets. How have current protests in Pakistan over Imran Khan’s release affected market performance?
A: Interestingly, while there have been political riots, including a recent 4% dip linked to these protests, the market quickly rebounded and continued its upward trajectory. This resilience indicates that investors are looking beyond short-term political uncertainties, driven rather by the positive economic indicators fostered by the IMF support and falling inflation rates.
Q: You mentioned a significant cut in interest rates. Can you elaborate on how this decision has influenced investor behavior?
A: Certainly. Pakistan’s decision to reduce interest rates by a record 250 basis points to 15% has also been pivotal. This move not only encourages borrowing and business growth but has also contributed to a decrease in inflation. As a result, lower interest rates can stimulate higher consumption and investment, driving up stock prices. The enhanced purchasing power of the consumers positively affects corporate profitability, enhancing overall market performance.
Q: Moving forward, what practical advice would you offer to investors watching these dramatic changes in the Karachi stock market?
A: Investors should closely monitor economic indicators such as inflation rates and any further developments related to the IMF program.The confidence in Pakistan’s market, as demonstrated by the soaring Karachi 100 Index, suggests that there are significant opportunities for growth. However, it’s also essential to remain cognizant of potential market volatility and political developments that could impact investor sentiment. Diversification can be a prudent strategy as well, considering equities across both Pakistan and the Indian market to capitalize on the distinct growth dynamics each presents.
Q: Thank you,Mr. Sohail, for your insights. It’s clear that Pakistan’s stock market is experiencing exciting developments that are worth watching.
A: Thank you for the prospect. It’s indeed a fascinating time for our market,and I look forward to seeing how it evolves in the future.