KARACHI
The stock market marked a historic milestone on Monday as the KSE-100 Index crossed the 110,000-point mark for the first time, driven by investor confidence in improving economic indicators and declining inflation. The market started on a downturn, losing over 1,000 points during the opening hours of trading, over potential government taxation measures on banks’ profits, before rebounding.
The Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index gained 1,210.56 points, or 1.11%, reaching an intraday high of 110,264.51. The session also saw a low of 107,902.66 before changing trajectory. “News that the government has set up a committee to consider increasing taxation on banks’ profits has dampened sentiment,” said Muhammad Saad Ali, Director of Research at Intermarket Securities Ltd. “Most banks are down over 4% already.
Banks led the most recent leg of the rally, and some of those returns will be pulled back in the interim.” The government is looking to tax bank profits derived from investments in government securities. A seven-member committee, led by Deputy Prime Minister Ishaq Dar, has been formed to review the legal framework of the banking sector’s advance-to-deposit ratio (ADR) and to foster consensus with banks.
The committee is expected to finalise recommendations by December 31 to ensure revenue targets are met and propose measures to encourage private-sector lending. Global factors also weighed on the market. Ahsan Mehanti, Managing Director and CEO of Arif Habib Commodities cited “a global equities selloff, foreign outflows, and concerns over tax shortfalls and IMF target slippages” as catalysts for bearish activity.
Macroeconomic developments continue to support long-term optimism. Inflation dropped to 4.9% in November, the lowest since April 2018. Saudi Arabia extended its $3 billion deposit for another year, strengthening Pakistan’s foreign reserves. Trade agreements worth $560 million with Saudi Arabia and a 25-month high in petroleum sales further signal growing economic activity. Additionally, the government raised Rs353 billion through an auction of Ijarah Sukuk, boosting liquidity.
Prime Minister Shehbaz Sharif celebrated recent economic milestones, including weekly inflation dropping to 3.57%, the lowest in six years. He attributed these achievements to the government’s efforts to stabilise the economy and highlighted rising remittances, increased investments, and stronger diplomatic ties.
PM Shehbaz said that the country was rapidly moving toward progress after achieving economic stability, reiterating his commitment to reducing hardships and fostering industrial growth, employment, and foreign investment.
