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PSX Surges Over 700 Points as Falling Bond Yields Boost Investor Confidence
Bulls dominated the Pakistan Stock Exchange (PSX) as the KSE-100 index gained 754 points, driven by falling bond yields and renewed investor interest in high dividend-yielding stocks. Could this signal a market rally ahead?
ND
by News Desk
2024-10-03
PSX Surges Over 700 Points as Falling Bond Yields Boost Investor Confidence

Karachi: The Pakistan Stock Exchange (PSX) saw a bullish run on Thursday, with the benchmark KSE-100 index climbing 754.76 points (0.92%) to close at 82,721.76. Earlier in the day, the index had surged by more than 800 points, signaling strong investor sentiment amid falling bond yields.
The rally comes as investors turn to equities, with bond yields decreasing and liquidity improving in the market. Lower bond yields make high-dividend-yielding and highly leveraged stocks more attractive, according to market analysts.


Raza Jafri, CEO of EFG Hermes Pakistan, highlighted that a significant chunk of foreign supply had been absorbed, boosting buyer confidence. “Lower bond yields are making equities more attractive, especially in dividend-yielding stocks,” he said.


Similarly, Mohammed Sohail, CEO of Topline Securities, linked the bullish momentum to falling yields in the money market, which renewed investor buying.
Sana Tawfik, head of research at Arif Habib Limited, pointed to several contributing factors behind the positive movement.

She noted an improvement in liquidity, coupled with a lower-than-expected inflation rate of 6.9%, which has fueled expectations of a potential interest rate cut.
The recent T-bills auction also played a crucial role in market sentiment. While the government raised Rs244 billion, slightly below the target of Rs250 billion, it rejected all bids for three-month treasury bills.

Experts believe the rejection, after a long gap, caused yields to fall, further driving investor interest in equities.
With the State Bank of Pakistan providing Rs2.7 trillion in profit to the government, surplus liquidity in the money market is seen as a game changer for the banking sector and has helped fuel market optimism.


The ongoing rally continues despite aggressive selling by foreign investors, largely influenced by political tensions. However, the local market's liquidity and favorable economic conditions appear to be propelling stocks upward.
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PakistanEconomy

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