Pakistan stocks set to climb on strong economic data, rate cut hopes

Pakistan stocks are expected to observe a positive trend in Pakistan’s stock market next week, due to improving macroeconomic indicators, including a record-high monthly current account surplus and robust remittance inflows.

Jibran Sarfraz, an equity expert, said the market is expected to show a positive trend next week, driven by improvements in macroeconomic indicators.
He noted that the equity market is likely to rerate on the back of a record-breaking monthly current account surplus, which marked the highest in the country's history.

Furthermore, remittances also demonstrated significant growth, reaching the highest monthly figure of $4.1 billion. Sarfraz said this development signals stability in foreign exchange reserves and the domestic currency in the coming weeks. This stability may create room for the State Bank of Pakistan to lower interest rates in the upcoming monetary policy announcement.

Salman Ahmad, head of retail investors at Aba Ali Habib Securities, stated that the equity market would likely remain positive due to several factors. These include healthy corporate results from the auto and cement sectors.

Ahmad added that market speculation suggests the government and banks have reached an agreement to address the circular debt issue. This resolution could bring affected stocks into focus, especially for buying opportunities. Ahmad emphasized that resolving the PKR 1.27 trillion circular debt could benefit stocks from the oil and gas sectors, such as PSO and Sui Twins, as the removal of debt from their books would enhance their financial health.

Ahmad further highlighted key macroeconomic indicators, including the record-breaking current account surplus of $1.2 billion and remittance inflows of $4.1 billion, which demonstrate stability in the domestic currency and foreign exchange reserves. However, he noted that investor reservations remain due to ongoing trade tensions between the USA and China, limiting market gains.

Despite these concerns, Ahmad described market sentiment as somewhat optimistic for export volumes. He suggested export houses could capitalize on higher duties imposed in regional countries during the current 90-day pause in the trade war.

An analyst from Arif Habib Ltd. said the market is expected to maintain its positive trajectory in the upcoming week, supported by improved investor sentiment and strong macroeconomic indicators. With earnings season underway, activity is anticipated across various sectors, particularly in stocks expected to report robust earnings.

Another analyst from Spectrum Securities observed that the market's focus appears to be on first-quarter earnings and the expectations surrounding these announcements. He noted recent share price movements reflecting this focus.

While fertilizers and E&Ps have lagged amid expectations of lower earnings, banks have shown improved outlooks following announcements from UBL and other major banks. The rerating of index-heavy stocks like LUCK and UBL has brought the index closer to its recent high range of 118,000–120,000 points. Investors are betting on other stocks to see similar upward adjustments.

The KSE-100 index closed at 117,316 points, up 2,462 points or 2.1%. Foreign selling during the week totaled $4.01 million, compared to net buying of $9.92 million last week.

Currency:

The US dollar gained against the Pakistani rupee in the interbank market during the week. The rupee fell by 25 paisas to close at 280.72, weakened by external payment pressures.

Gold Prices:

In the local market, gold prices rose by 3.22% during the week, reaching PKR 349,700 per tola, in line with international market trends. Global gold prices are on the rise, with Citi Research raising its three-month gold price target to $3,500 per ounce from $3,200, citing fresh gold purchases by Chinese insurers and safe-haven flows amid tariff risks and market weakness.