Business
KSE-100 Index up 1.30pc, dollar grows stronger amid high demand
KSE-100 Index up 1.30pc, dollar grows stronger amid high demand
The stock market continued its movement in upward trajectory on Monday – the first business day of the week – with the benchmark KSE-100 Index jumping 1.13 per cent to a reach a new high, as the prospects of imminent foreign investment got brighter with Caretaker Prime Minister Anwaarul Haq Kakar’s visit to the United Arab Emirates (UAE).
On the other hand, the US dollar was traded at Rs286 in official exchange rate after gaining 63 paisa and for Rs287 in open market with a 50 paisa surge, as the money market hasn’t been able to meet the demand amid low supply.
During his stay, Kakar and his team are expected to sign a number of memorandums of understanding (MoUs) on different subjects including the investment in energy, port operations, waste water treatment, food security, logistics, mining, aviation, and banking and financial services.
By 2:19pm, the KSE-100 Index was recorded at 59,854.25 after moving up by 767.90 points against the previous closing of 59,086.35.
Earlier, a successful review of the $3 billion stand-by arrangement by the International Monetary Fund (IMF) gave a clear message that the government would have to deal with issues like circular debt and reforming the energy sector.
At the same time, privatisation of loss-making state-owned enterprises is also on the cards, pointing to an imminent inflow of foreign investment besides providing the much-needed opportunity to the local investors to explore new ventures.
Foreign investment in sectors like oil and gas, mining, banking, aviation and agriculture means the listed companies will see their stocks moving up for a considerable period after years of undervaluation.
Meanwhile, another factor which will help the market in long-term will be documentation of economy, thus forcing investors to use more traditional and legal means, like the stocks, for earning profits.
Read more: Major changes on the cards for boosting tax-to-GDP ratio to 15pc
Amid a visible and consistent improvement in macroeconomic indicators coupled with an end to the series of rate hikes followed by possible rate cuts, the local investors have already been rushing to the stocks after dwindling property prices and a stronger rupee due to the government action against market manipulators made them think about more profitable avenues.
This trend is making the stock market more and more lucrative for investors when compared with unproductive real estate sector, which first witnessed stagnation and later went into a decline.
Various factors are responsible for this, but the main reason is overinvestment in both commercial and residential properties – considered a safe haven, especially amid the economic turmoil Pakistan is facing.
Moreover, the rising stocks will certainly also discourage investment in safe haven currencies like dollar and assets like gold.
One must recall that Pakistan has one of the worst, if not the worst, ratio of people investing in stocks when compared with the rest of the world. The reason is simple: real estate, gold and safe haven dollar provide an easy way to earn profit.
This mindset has resulted in ignoring the manufacturing as well as research and innovation – the pre-requisites for a developed and sustainable economy – both individual and institutional levels.
The dollar steadied against major peers on Thursday, continuing its near paralysis of the past two days before more concrete announcements on tariffs from U.S. President Donald Trump.
A spate of central bank policy decisions are also due over the next week, with the Bank of Japan widely expected to raise interest rates at the end of a two-day meeting on Friday.
Rate decisions from the U.S. Federal Reserve and European Central Bank are scheduled for Wednesday and Thursday of next week, respectively.
The dollar index – which measures the currency versus six top rivals, including the euro and yen – was flat at 108.25, following two days of gains of around 0.1%.
On Monday, it tumbled 1.2%, its steepest one-day slide since November 2023, as Trump’s first day in office brought a barrage of executive orders, but none on tariffs.
So far this week, Trump has mooted levies of around 25% on Canada and Mexico and 10% on China from Feb. 1. He also promised duties on European imports, without giving details.
“President Trump has so far taken a less hostile-than-expected approach to China,” amid overall “softer-than-expected policies and tone on tariffs”, said Carol Kong, a currency strategist at Commonwealth Bank of Australia.
At the same time, “we are cautious (that) risk sentiment remains fragile and can quickly turn sour if President Trump strikes a more aggressive tone.”
The Chinese yuan was little changed at 7.2812 per dollar in offshore trading .
Wall Street’s main indexes rose Wednesday, with the S&P 500 hitting an intraday record high thanks to strong Netflix earnings and a rally in tech shares.
Japan’s yen edged up about 0.1% to 156.40 with markets pricing 95% odds of a quarter-point hike on Friday.
The euro was flat at $1.0411. The ECB is widely expected to cut rates by a quarter point next week.
The Canadian dollar held steady at C$1.4386 against the greenback. The Bank of Canada is seen as likely to reduce rates by a quarter point next Wednesday.
The Mexican peso was little changed at 20.47 versus the U.S. currency.
Oil prices dipped in early trade on Thursday, extending losses amid uncertainty over how proposed tariffs by U.S. President Donald Trump on several countries would impact global economic growth and energy demand.
Brent crude futures fell 23 cents, or 0.3%, to $78.79 a barrel at 0135 GMT, while U.S. West Texas Intermediate crude (WTI) eased 18 cents, or 0.2%, to $75.26.
In its previous session, Brent futures settled at $79.00 in a fifth straight day of losses. WTI futures settled at $75.44 in a fourth consecutive day of declines.
Trump has said he would add new tariffs to his sanctions threat against Russia if the country does not make a deal to end its war in Ukraine. He added these could be applied to “other participating countries” as well.
He also vowed to hit the European Union with tariffs, impose 25% tariffs against Canada and Mexico, and said his administration was discussing a 10% punitive duty on China because fentanyl is being sent to the U.S. from there.
Meanwhile, estimates from an extended Reuters poll showed that on average U.S. crude oil stockpiles were expected to have fallen by 1.6 million barrels in the week to Jan. 17.
Gasoline stockpiles were estimated to have risen by 2.3 million barrels last week, and distillate inventories were likely to have gained 300,000 barrels.
The poll was conducted ahead of the American Petroleum Institute industry group’s report and another from the Energy Information Administration at 12:00 p.m. ET (1700 GMT) on Thursday.
European wind shares fell on Tuesday (January 21).
The reports were delayed by a day due to the Martin Luther King Jr. Day federal holiday on Monday.
Pakistan and Saudi Arabia have reaffirmed their commitment to further strengthening the bilateral economic ties for shared prosperity.
The commitment was expressed when Finance Minister Muhammad Aurangzeb met with his Saudi counterpart Mohammad bin Abdullah Al-Jadaan on the sidelines of World Economic Forum Annual Meeting in Davos.
Muhammad Aurangzeb highlighted the key reform measures undertaken by the Government to promote economic stability and sustainable growth.
He briefed him on structural reforms, fiscal discipline and regulatory improvements that have contributed to an improved investment climate in Pakistan.
Earlier, Aurangzeb met Anna Bjerde, Managing Director of Operations at the World Bank.
They discussed cooperation between Pakistan and the World Bank, with a particular focus on Pakistan’s macroeconomic stability.
The finance minister emphasized the government’s strong partnership with the Bank and expressed hope that the World Bank would continue playing a key role in the country’s socio-economic development.
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