Hopes of Saudi crown prince’s visit, Reko Diq investment propel Pakistan stocks to new all-time high

Stockbrokers monitor the latest share prices at the Pakistan Stock Exchange (PSE) in Karachi on July 3, 2023. (AFP/File)

• The benchmark index recorded its highest-ever closing at 69,620 points, after gaining 1,203 points on Monday
• Analysts say optimism on IMF front, foreign investment in government securities also drove bullish sentiment

KARACHI: The Pakistan Stock Exchange (PSX) on Monday hit a new all-time high of 69,620 points, equity analysts said, attributing it to hopes of the Saudi crown prince’s visit to Pakistan and investment in the Reko Diq gold mine project.
The benchmark KSE100 index crossed the psychological barrier of 69,000 points by gaining 1,203 points, or 1.76 percent, which is highest increase after January 01, 2024.
It followed Prime Minister Shehbaz Sharif’s visit to Saudi Arabia where he met with Crown Prince Mohammed bin Salman and other officials.
This was the Pakistani prime minister’s first foreign trip since forming a coalition government in February this year.
“The basic reason of continuation of the bullish market is the recent visit of PM to Saudi Arabia, where he held an important meeting with the crown prince and the Saudi interest in Pakistan is clear, particularly $1 billion investment in Reko Diq project,” Sheheryar Butt, portfolio manager at Karachi-based Darson Securities, told Arab News.
Although there has been no official confirmation of it, Pakistani media reports have suggested the Kingdom is interested in investing about $1 billion in the Reko Diq gold and copper mine located in Pakistan’s southwestern Balochistan province.
One of the largest undeveloped copper-gold projects in the world, Reko Diq is owned 50 percent by Canada-based Barrick Gold Corporation, 25 percent by three federal state-owned enterprises, 15 percent by Balochistan on a fully funded basis, and 10 percent by Balochistan on a free carried basis, according to Barrick.
Butt said the market stakeholders were also expecting that the Saudi crown prince might visit Pakistan after Eid Al-Fitr, which boosted investor confidence.
“It is very much likely that the Saudi Crown Prince may visit Pakistan after Eid, following the Pakistan prime minister’s Saudi tour,” he said.
Market sentiments, according to Butt, were also buoyed by foreign investment in equity and money market, while inflows of financial results of companies also played a key role in the bullish close.
Samiullah Tariq, director at Pakistan Kuwait Investment Company, believed the bullish trend also resulted from hopes of a new International Monetary Fund (IMF) loan program.
“Apart from PM’s Saudi visit which is expected to materialize some investment deals, the optimism at the IMF front is also propelling the stocks to new highs,” Tariq told Arab News. 
The South Asian nation is formulating a proposal to present to the IMF for a more extensive loan program, with an anticipated size of $7-9 billion. This follows a staff-level agreement between Pakistan and the IMF on the final review of a $3 billion Stand-By Arrangement (SBA), paving the way for the release of $1.1 billion by the lender this month.
Ali Nawaz, CEO of Chase Securities, said the bullish trend could be attributed to a combination of factors, including positive economic news flow like the IMF agreement, which had instilled confidence in investors.
“Additionally, increased buying from both local and foreign investors has driven up stock prices due to higher demand,” he said.
Nawaz, however, was uncertain about the sustainability of the current rally.
“Global economic conditions and the continuation of positive domestic reforms will play a significant role in determining the PSX’s future performance,” he added.
The stock market confidence was also boosted by the appreciation of the Pakistan’s currency which continues to stabilize against United States (US) dollar.
The greenback has come down to around Rs280 since the Pakistani authorities took serious actions against dollar smuggling and hoarding.
The US dollar is currently trading at around Rs277 for buying and Rs279 for selling in the open market, according to Exchange Companies Association of Pakistan (ECAP). It is trading at Rs277.95 in the interbank market.
“The strict action taken by the country’s army chief against smuggling of dollars to Afghanistan and hoarding and manipulation of currency by certain banks is yielding results,” Malik Bostan, the ECAP chairman, told Arab News.
Bostan said exporters were coming in large numbers to convert their proceeds in local currency due to fear of further depreciation of greenback.
“We expect that the currency would further appreciate against dollar and may stabilize around Rs250 in the interbank and open markets,” he added.