Pakistan shares hit record high over 75,000 as foreign buyers pile in

By Ariba Shahid

KARACHI, Pakistan (Reuters) -Pakistan's main share index continued its rally to breach the 75,000 mark for the first time on Wednesday on the back of heavy foreign buying while expectations of monetary easing amid falling inflation also underpinned sentiment.

Pakistan's benchmark share index closed at 74,684 points, up 0.2% on the day after rising to 75,115 earlier in the session. The benchmark index has surged 79% over the past year, and is up 15.5% year-to-date after an IMF rescue last summer helped the government avert a debt default.

Mohammed Sohail, CEO of Topline Securities, said Wednesday's gains were fuelled by foreign fund buying.

On Tuesday, the MSCI index added a Pakistani bank, National Bank of Pakistan, to the MSCI frontier market index. Its shares rose 1.1% on the day, outperforming the benchmark index.

"We estimate Pakistan's weight will also increase, thereby having the potential to attract more passive foreign funds," Sohail said.

Net foreign purchases of shares stood at $65 million in little over five months of 2024, compared with $74 million in calendar year 2023. Pakistan shares saw cumulative net outflows of $978 million between 2020 and 2022, according to data compiled by Arif Habib Limited.

"Pakistan equities are up 80% during fiscal year to date, with the currency appreciating marginally during the same period, the index is up 85% in dollar terms, making it an outstanding investment for a foreign fund manager," said Adnan Sheikh, research analyst at Pak Kuwait Investment Company.

The market is picking up steam due to an anticipated decline in inflation to 13.5% during May and expectations of a monetary easing cycle starting in June, said Shahid Habib, CEO of Arif Habib Limited.

Consumer price inflation slowed to 17.3% in April from a year earlier, the lowest reading in nearly two years.

Investors were also optimistic about discussions on a new IMF financing program and the economic roadmap ahead, Habib said.

Pakistan last month completed a short-term, $3 billion IMF programme, but the government of Prime Minister Shehbaz Sharif has stressed the need for a fresh, longer-term programme.

An IMF mission is in Pakistan to discuss the financial year 2025 budget, policies, and reforms under a potential new programme.

(Reporting by Ariba Shahid in Karachi; Editing by Tom Hogue, Lincoln Feast, Kim Coghill and Alison Williams)