KARACHI: Pakistan’s stocks rose more than 9 percent, the highest single-day gain in decades, and its international bonds rallied on Monday, analysts said, following a ceasefire with India and the approval of $1 billion tranche by the International Monetary Fund (IMF).
The Pakistan Stock Exchange (PSX) suffered losses in the last three sessions since India struck multiple Pakistani cities with missiles on Wednesday. Pakistan responded with fighter jet, drone and artillery strikes and four days of conflict between the two sides came to a halt on Saturday evening after the United States announced a surprise ceasefire.
On Monday, the benchmark KSE-100 index rose by 9.45 percent, or 10,123 points, to close at 117, 297 points, compared to Friday’s close of 107,174 points. The country’s currency and international bonds also surged, paring their losses since tensions rose with India over an attack in Indian-administered Kashmir on April 22.
“The highest single-day gain in almost three decades comes after the ceasefire announcement of India and Pakistan,” Shankar Talreja, head of research at Karachi-based Topline Securities brokerage firm, told Arab News.
The KSE-30 index, which includes the top 30 most liquid companies, increased about 9.7 percent during the intraday trade, forcing the bourse to halt trading at 9:37am Pakistan time for an hour.
The geopolitical tensions had led to aggressive selloffs and fueled widespread investor concerns at the bourse which lost more than 12 percent between April 22 and May 8.
Monday’s rally triggered the upper circuit breaker for the second time in the PSX’s history since July 2023, according to Adnan Sami Sheikh, an analyst at Pakistan Qatar Investment Company Ltd. The otherwise risk-averse investors went on a buying frenzy primarily on the back of a US-brokered ceasefire agreement between India and Pakistan.
“Local individual investors who had been net sellers in the recent past were aggressive buyers,” Talreja said, adding that according to Bloomberg-compiled data, PSX had become the world’s third best performing stock index over the last one year.
The other factor behind Monday’s rally was the IMF’s approval of $1.4 billion loan to Pakistan under its climate resilience fund, and the release of a $1 billion as part of the country’s $7 billion bailout program secured in Sept. last year, taking the total disbursements under the program to $2.1 billion, according to analysts.
The much-awaited inflows will boost the cash-strapped nation’s foreign exchange reserves, which Islamabad seeks to increase to $14 billion by June. The IMF, which the once-near-default Islamabad has visited frequently in recent years, wants Pakistan to hold enough dollars for at least three months of imports.
PAKISTANI RUPEE AND BONDS
Pakistan’s currency marked the first gain in the last seven sessions this month and rose 0.1 percent, with the US dollar closing at Rs281.57, according to the State Bank of Pakistan.
The rupee had devalued 0.3 percent since last month, when Pakistan’s now-de-escalating border tensions with India had first resurfaced.
The South Asian nation’s global bonds also rallied sharply and rose as much as 5.7 cents globally, Reuters news agency reported, citing Tradeweb data. Most of the bond maturities have clawed back the losses sustained since April 22.
“The investors are now perceiving lower country risk premium for Pakistan,” Talreja added.
Commenting on the developments, Pakistan’s finance adviser Khurram Schehzad said the South Asian nation has much more to offer.
He said positives like the IMF board’s approval, declining interest rate, spillover effect of a potential settlement of the US-China tariff issue, and Pakistan’s “measured and responsible” response in terms of narrative and the actions on ground against India have caught the attention of investors.
“Renewed investor confidence...enhanced IMF funding and support, renewed regional investor interest, one of the lowest inflation rates and stable currency parities in the region all position Pakistan for a more meaningful economic upside moving forward,” he said.
Pakistan stocks record single-day gain, bonds rally after ceasefire with India, IMF tranche approval
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Pakistan stocks record single-day gain, bonds rally after ceasefire with India, IMF tranche approval
- Pakistan and India last week traded air, ground and drone strikes, leading to aggressive selloffs by investors
- On Monday, Pakistani rupee marked first gain since the start of May as Pakistan’s dollar bonds rose 5.7 cents
Pakistan, global crypto exchange discuss modernizing digital payments, creating job prospects
- Pakistani officials, Binance team discuss coordination between Islamabad, local banks and global exchanges
- Pakistan has attempted to tap into growing crypto market to curb illicit transactions, improve oversight
ISLAMABAD: Pakistan’s finance officials and the team of a global cryptocurrency exchange on Friday held discussions aimed at modernizing the country’s digital payments system and building local talent pipelines to meet rising demand for blockchain and Web3 skills, the finance ministry said.
The development took place during a high-level meeting between Finance Minister Muhammad Aurangzeb, Pakistan Virtual Assets Regulatory Authority (PVARA) Chairman Bilal bin Saqib, domestic bank presidents and a Binance team led by Global CEO Richard Teng. The meeting was held to advance work on Pakistan’s National Digital Asset Framework, a regulatory setup to govern Pakistan’s digital assets.
Pakistan has been moving to regulate its fast-growing crypto and digital assets market by bringing virtual asset service providers (VASPs) under a formal licensing regime. Officials say the push is aimed at curbing illicit transactions, improving oversight, and encouraging innovation in blockchain-based financial services.
“Participants reviewed opportunities to modernize Pakistan’s digital payments landscape, noting that blockchain-based systems could significantly reduce costs from the country’s $38 billion annual remittance flows,” the finance ministry said in a statement.
“Discussions also emphasized building local talent pipelines to meet rising global demand for blockchain and Web3 skills, creating high-value employment prospects for Pakistani youth.”
Blockchain is a type of digital database that is shared, transparent and tamper-resistant. Instead of being stored on one computer, the data is kept on a distributed network of computers, making it very hard to alter or hack.
Web3 refers to the next generation of the Internet built using blockchain, focusing on giving users more control over their data, identity and digital assets rather than big tech companies controlling it.
Participants of the meeting also discussed sovereign debt tokenization, which is the process of converting a country’s debt such as government bonds, into digital tokens on a blockchain, the ministry said.
Aurangzeb called for close coordination between the government, domestic banks and global exchanges to modernize Pakistan’s payment landscape.
Participants of the meeting also discussed considering a “time-bound amnesty” to encourage users to move assets onto regulated platforms, stressing the need for stronger verifications and a risk-mitigation system.
Pakistan has attempted in recent months to tap into the country’s growing crypto market, crack down on money laundering and terror financing, and promote responsible innovation — a move analysts say could bring an estimated $25 billion in virtual assets into the tax net.
In September, Islamabad invited international crypto exchanges and other VASPs to apply for licenses to operate in the country, a step aimed at formalizing and regulating its fast-growing digital market.
