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Pakistan shares surge 6% after IMF deal, autos gain on hopes of import restart

The country secured a $3 billion short-term financial package, giving the South Asian economy some much-awaited respite as it teeters on the brink of default

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A stock broker talks on phones while monitoring the market from his booth during trading session at the Pakistan Stock Exchange in Karachi on Monday. -- Reuters

By Reuters

Published: Mon 3 Jul 2023, 11:19 AM

Last updated: Mon 3 Jul 2023, 11:20 AM

Pakistan's benchmark share index gained more than 6% on Monday in its first trading session after the crisis-struck country secured funding from the International Monetary Fund, with auto stocks rising on hopes import restrictions would be eased.

Pakistan secured a $3 billion short-term financial package from the IMF on Friday, giving the South Asian economy some much-awaited respite as it teeters on the brink of default.

"Today's gain in benchmark KSE 100 Index will likely to be highest in the history of Pakistan Stock exchange," Topline Securities said in a tweet.

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The index was up 2,414 points at 43,867 at 11:30 a.m. local time (0630 GMT). In terms of points, the gain is on track to be its highest ever, and if the market sustains its current gains, it would be its biggest single-day gain in percentage terms since March 2009.

The Pakistan rupee was little moved, trading at 286 against the U.S. dollar.

Among the key stocks to advance, automakers rose 6%-7.5% on expectations that import restrictions would be lifted under the IMF deal.

Several automakers including Pakistan Suzuki Motor Co had announced prolonged plant closures in 2023, citing import restrictions.

Honda Atlas Cars (Pakistan) and Pakistan Suzuki shares rose 7.5% to hit upper circuits while Indus Motor Co. , which markets Toyota cars in the country, gained 6%.

"Auto sector stocks were trading at cheap valuations. With import ban lifted and $3.0 billion IMF deal secured, companies such as PSMC, INDU and HCAR will not face any issues in their respective supply chains," said Muhammad Iqbal Jawaid, an investment analyst at Arif Habib Limited. "All the necessary parts required for the assembly of vehicles will be available on time."

Reuters

Published: Mon 3 Jul 2023, 11:19 AM

Last updated: Mon 3 Jul 2023, 11:20 AM

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