PSX closes at all-time high on easing inflation, Chinese financing

The Pakistan Stock Exchange closed at an all-time high on Monday, gaining 1% on the expectation of easing inflation rate and rollover of Chinese loans that will strengthen foreign exchange reserves.

The benchmark KSE-100 index was up 1,248 points to close at 125,627 points.

The main reason behind the rise was that the Chinese government and some of the country's commercial banks agreed to finance $3.4 billion for Pakistan. The amount will be deposited in the State Bank of Pakistan.

Another development that improved sentiment was that Pakistan is set to receive a $500 million loan from an institution soon to help strengthen reserves achieving the International Monetary Fund's target of $14 billion by June 30.

Moreover, investors made fresh bets in choice scrips on expectations that the inflation rate is likely to remain in range of 3-4% for June.

An easing inflation rate would likely create room for an interest rate cut by the State Bank's Monetary Policy Committee next month.

Gas shares were in the limelight after the government's decision to raise gas prices. Shares of Sui Southern Gas and Sui Northern Gas were up because the companies would benefit, an analyst stated.

An analyst from Al-Habib Capital said that investor sentiment was buoyed by Bloomberg naming Pakistan the most improved economy in terms of sovereign default risk. Additionally, confidence was reinforced by the Finance Ministry's projection of June inflation at 3–4% and China’s rollover of its loan.