Pakistan Stocks Near Record High After Biggest Foreign Buying in a Decade

Pakistan Stocks Near Record High After Biggest Foreign Buying in a Decade improving macro economic indications and boosting sentiments.

Pakistan’s stock market closed near its all-time high on Thursday, driven by strong foreign inflows and improved macroeconomic conditions. The Pakistan Stock Exchange’s KSE-100 index gained 1.1%, nearly surpassing its previous record of 81,865.10 after reaching a new peak earlier in the session. The index has surged over 30% this year, supported by foreign investors’ net purchases of $87 million in local stocks, the highest since 2014, according to Bloomberg data.

The market’s strong performance this year is attributed to the country’s improving economic outlook, bolstered by an initial loan agreement with the International Monetary Fund in July. Additionally, Pakistan’s current account balance has improved, and the central bank has cut interest rates as inflation pressures have eased in recent months.

However, there are potential risks ahead. In July, Pakistan was downgraded to a frontier market from a secondary emerging market by FTSE Russell, a change that takes effect on September 23. This downgrade could affect market performance, with Vanguard Group Inc. expected to reduce its holdings in Pakistan stocks, currently valued at $160 million, according to a report from Topline Securities Ltd.

Despite these concerns, some analysts believe there is further potential for growth in the stock market, especially in sectors like fertilizer and energy. Aqeel Karim Dhedhi, chairman of the AKD Group, noted that Pakistan’s stock market remains “very cheap for foreign investors,” and investment is likely to continue, particularly following the U.S. Federal Reserve’s recent interest rate cuts.

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