Karachi, The Karachi Stock Exchange's KSE-100 index surged to new heights this week, closing at a remarkable 57,063, a 3% week-over-week increase. The market's robust performance was underpinned by a substantial 40% week-over-week rise in average daily traded volume, with 761 million shares exchanged.
According to JS Research, the market's buoyancy was largely attributed to several key factors. Among them were significant capital inflows, a Staff Level Agreement with the International Monetary Fund (IMF), and growing expectations of interest rate cuts in the wake of recent decreases in Treasury bill cutoff yields. Additionally, the decline in both domestic and international oil prices contributed to the optimistic market sentiment. With the IMF's Executive Board's approval, Pakistan is poised to receive approximately US$700 million in December 2023.
Following the IMF talks, the Pakistani government also indicated a potential increase in gas prices slated for January 2024. In a separate development, the Federal Cabinet approved a retrospective imposition of a 40% additional tax on banks' income from foreign exchange for the calendar years 2021-2022. This decision notably impacted the performance of banking stocks.
In the international arena, oil prices continued their downward trajectory, hitting a four-month low. This decline was driven by concerns over demand in the United States and China.
The MSCI quarterly review also brought some changes to the Pakistani stock market. Although 17 Pakistani stocks retained their spots in the MSCI Frontier Market Index, there were adjustments in the MSCI FM Small Caps Index, set to take effect from December 1st, 2023. The review saw the removal of KOHC, MLCF, FABL, and SHEL from the index, while PSMC, AGHA, SAZEW, and AGP were added.