Pakistan stocks jump most since 2020 in hopes of political stability
During this period, the nation’s currency also climbed
Pakistan stocks rallied despite a broad equity selloff in Asia in hopes of political stability brought by the election of opposition leader Shehbaz Sharif as the new prime minister.
The KSE-100 Index jumped 3.8% on Monday (11 April) to post its biggest gain since April 2020, after former cricket star Imran Khan was ousted in a no-confidence vote that ended his four-year run.
During this period, the nation's currency also climbed, reports Bloomberg.
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A reduction in political uncertainty is helping investor sentiment, said Mohammed Sohail, chief executive officer at Topline Securities in Karachi.
Meanwhile, Pakistan's top central banker pledged policy actions "on a timely basis" to ensure stability amid a political shakeup and deteriorating economy.
"I have a broader message to the investor community, and that is that such political processes are not uncommon in democracies," State Bank of Pakistan Governor Reza Baqir said in a Bloomberg Television interview Monday.
"It is important that economic policymaking institutions act on a timely basis to ensure that the goal of financial stability remains."
Monday's gains in Pakistan stocks came even as a surge in U.S. Treasury yields triggered losses across Asian markets. The KSE-100 Index has now erased all its losses for 2022 and is up 3.5% year-to-date.
Bloomberg Intelligence said Imran Khan's ouster in a no-confidence vote is likely to dial down recent political turmoil.
"We expect the parliament to pick opposition leader Shehbaz Sharif as the new prime minister. This should put Pakistan in a better position to strike a deal with the IMF to secure the rest of the bailout funds," said the research organisation.
Imran's downfall was accelerated by inflation running faster than 12%, the rupee trading near a record low to the dollar and foreign reserves shrinking.
"The market is rejoicing the rare smooth handover of power in the lower house despite last night's protests and seemingly confrontational approach by former PM Imran Khan," said Faisal Bilwani, head of international sales at Alfalah CLSA Securities.
Bets on swift IMF negotiations and easing commodity prices are also helping revive confidence, he said.
