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Stock market stages rally over reports of positive FATF outcome

Stock market stages rally over reports of positive FATF outcome

KARACHI: After a considerable declining trend in the previous weeks, reports of positive outcome from the FATF meetings in Paris for Pakistan restored some of investors’ confidence in the stock market in the early trading hours on Wednesday.

The benchmark KSE 100-Share Index reached 40,505.27 points after gaining 329.92 points or 0.82pc as of 11.19am. The Index opened at 40,221.82 today. Yesterday, the market closed at 40,175.35 after losing 101 points than the previous day (Monday). The apex of the day so far remained 40,586.65 while the low was 40,175.35.

The rally came following confirmed reports from sources that Pakistan will not be put in the black list, but will remain in the grey list till October 2020 i.e. the country is given more time to implement effectively the global illicit financing watchdog’s 27 recommendations about the anti-money laundering and combating financing of terrorism (AML/CFT) mechanism.

In previous weeks, the market kept struggling for its sustainability when confusion and uncertainty surrounded investors until late Friday when the IMF, in its concluding remarks affirmed that Pakistan had been successful in completing the “structural benchmarks” as well as in meeting “all end-December performance criteria” which had been set for the implementation of $6 billion Extended Fund Facility programme.

Previously, other persisting factors in the decline of stock market were the FATF concerns and large suspension of imports from China, which had been hammering the stock market, following the outbreak of COVID-19. Besides, strife political disagreements between coalition parties in the government until some of them were settled in meetings with the ruling PTI.

Since mid-January, investors have been adopting extremely cautious behaviour after more headlines cover mounting deaths due to coronavirus taking full hold, a plunge in global crude oil prices, unchanged main policy rate by the State Bank of Pakistan at 13.25 percent for the next two months and political uncertainty in the country.

The SBP in the latest monetary policy statement kept the interest rate unaltered and pushed selling in the leveraged sectors such as cement and steel. Concerns over higher than expected reading of inflationary pressures and political uncertainty sparked by coalition partners of the government also kept investors away from the market.