The Pakistan Stock Exchange's benchmark, the KSE 100 index, has continued its impressive climb, reaching the 118,600 mark, which is near its all-time high. This represents a 17% rebound from last week's lows. The rally was spurred by a ceasefire agreement between Pakistan and India, which alleviated investor concerns and enhanced the appeal of riskier assets in both nations. The ceasefire followed a period of heightened tension involving airstrikes and the downing of aircraft, during which both countries had pledged retaliatory actions, marking the most significant escalation in decades.
Investor confidence was further strengthened by the anticipated additional support from the International Monetary Fund (IMF), which includes an immediate $1 billion disbursement and the introduction of a new $1.4 billion climate resilience initiative. On the monetary side, the State Bank of Pakistan made an unexpected move by reducing its key policy rate by 100 basis points, bringing it down to 11% last week. This was the first rate cut of 2025 and lowered borrowing costs from a previous record high of 22%. The stock gains were widespread, with the retail trade, utilities, and logistics sectors leading the charge.
