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
Thousands flee northwest Pakistan after mosques warn of possible military action
- Residents of the Tirah Valley said they have moved out of the area into nearby towns despite heavy snowfall and cold winter temperatures
- Defense Minister Khawaja Asif denied any operation was planned or underway in Tirah, calling the movement a routine seasonal migration
BARA/KARACHI: Tens of thousands of people have fled a remote mountainous region in northwestern Pakistan in recent weeks, residents said, after warnings broadcast from mosques urged families to evacuate ahead of a possible military action against militants.
Residents of the Tirah Valley, in the Pakistani province of Khyber Pakhtunkhwa that borders Afghanistan, said they have moved out of the area into nearby towns despite heavy snowfall and cold winter temperatures because of the announcements to avoid the possible fighting.
“The announcements were made in the mosque that everyone should leave, so everyone was leaving. We left too,” said Gul Afridi, a shopkeeper who fled with his family to the town of Bara located 71 km (44 miles) east of the Tirah Valley.
Local officials in the region, who asked to remain unidentified, said thousands of families have fled and are being registered for assistance in nearby towns.
The Tirah Valley has long been a sensitive security zone and a stronghold for Tehreek-e-Taliban Pakistan, a militant group that has carried out attacks on Pakistani security forces.
The Pakistani government has not announced the evacuation nor any planned military operation.
On Tuesday, Pakistan’s Defense Minister Khawaja Muhammad Asif denied any operation was planned or underway in Tirah, calling the movement a routine seasonal migration driven by harsh winter conditions.
However, a Pakistani military source with knowledge of the matter said the relocation followed months of consultations involving tribal elders, district officials and security authorities over the presence of militants in Tirah, who they said were operating among civilian populations and pressuring residents.
The source asked to remain unidentified as they are not authorized to speak to the media.
The source said civilians were encouraged to temporarily leave to reduce the risk of harm as “targeted intelligence-based operations” continued, adding there had been no build-up for a large-scale offensive due to the area’s mountainous terrain and winter conditions.
Pakistan’s military media wing, the Inter-Services Public Relations, the interior ministry, and the Khyber Pakhtunkhwa provincial government did not respond to requests for comment made on Friday.
NOT THE COLD
Residents rejected suggestions that winter alone drove the movement.“No one left because of the cold,” said Abdur Rahim, who said he left his village for Bara earlier this month after hearing evacuation announcements. “It has been snowing for years. We have lived there all our lives. People left because of the announcements.”
Gul Afridi described a perilous journey through snowbound roads along with food shortages that made the evacuation an ordeal that took his family nearly a week.
“Here I have no home, no support for business. I don’t know what is destined for us,” he said at a government school in Bara where hundreds of displaced people lined up to register for assistance, complaining of slow processes and uncertainty over how long they would remain displaced.
Abdul Azeem, another displaced resident, said families were stranded for days and that children died along the way.
“There were a lot of difficulties. People were stuck because of the snow,” he said.
The Tirah Valley drew national attention in September after a deadly explosion at a suspected bomb-making site, with officials and local leaders offering conflicting accounts of whether civilians were among the dead.
