Pakistan Stock Market Rises 1% Ahead of SBP Policy Meeting

Pakistan’s benchmark share index experienced a 1% rise on Monday, fueled by optimism surrounding the State Bank of Pakistan’s (SBP) upcoming policy meeting and positive developments from China. This market movement comes in the wake of recent agreements with the International Monetary Fund (IMF) and the passage of a new budget.

Analysts are anticipating a further reduction in the key interest rate by the SBP, following its previous cut of 150 basis points in June from a record high of 22%. This reduction was the first in nearly four years and was aimed at stimulating economic growth amidst a significant decline in retail inflation.

Adnan Sheikh, assistant vice president of research at Pak Kuwait Investment Company, attributed the market’s positive movement to the “encouraging news flow over the weekend from China, coupled with expectations of a rate cut by the central bank.”

In addition to monetary policy expectations, Pakistan is actively negotiating debt reprofiling with China, focusing on its power sector. The finance minister revealed that these discussions are taking place on a project-by-project basis, with Islamabad planning to appoint a domestic advisor in China.

The IMF’s recent agreement to a $7 billion bailout for Pakistan highlights ongoing concerns over high power theft rates and distribution losses, which contribute to growing debt in the power sector. The IMF’s involvement underscores the need for structural reforms to stabilize Pakistan’s economy and manage its external debt more effectively.