PSX benchmark index crosses all-time high in intraday trading
KARACHI: Share prices on the Pakistan Stock Exchange (PSX) started rallying as soon as the first trading session of the week began, with the benchmark index touching an all-time intraday high at 9:39am on Monday.
Going past 36,228.88 points, which was the previous highest intraday level recorded on August 6, the KSE-100 Index hovered at 36,300.52 points at the time of filing this report.
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The benchmark index, which measures the performance to most liquid stocks on the national bourse, had already surged 3.6% in the last week.
Analysts believe the recent bullish trend in stock prices is a result of Pakistan’s possible reclassification from a frontier market to an emerging market by MSCI, an international firm that provides investment decision support.
MSCI is going to announce its decision in June whether Pakistan meets the criteria for its emerging market status. Global institutional investors use different MSCI indices — such as frontier, emerging, China and US markets – to create balanced portfolios to generate maximum returns while keeping in view their overall risk appetite.
Although the actual reclassification of Pakistan will take effect a year after the announcement, global investors tend to start factoring in the reclassification ahead of the actual change, prompting massive inflows of global funds in the case of a favourable decision.
The recent increase in share prices comes after almost nine months of bearish trends in the stock market. Foreign investors pulled out their investments in the wake of a global meltdown in equity markets for the most part of the fiscal year starting from July 2015.
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The Pakistani share market had remained largely flat in 2015, as the KSE-100 Index had gained just 685 points, resulting in a meagre annual return of 2.1%.