Stocks rebound on S&P rating upgrade, PTI protest postponement

KARACHI: It was a routine day at the start of trading at the Pakistan Stock Exchange on Tuesday, despite the big news that Standard & Poor's has elevated Pakistan's long-term credit rating from B- to B.

The market reacted positively on the news but investors were cautious amid opposition party Pakistan Tehreek-e-Insaf's call for a protest sit-in in Islamabad. But as soon as the PTI called off its protest, the market reacted like a wild mustang.

The news prompted buying and the benchmark 100-index regained its seven-day losses in just few hours. Trading volume doubled to 506 million shares and trading value increased to Rs.17 billion—it was only Rs.7 billion the previous day.

Out of the 440 active companies, 388 closed in green and share prices of only 39 companies dropped. K-Electric was the volume leader with 41 million shares, followed by Bank of Punjab with 28 million shares. Market capitalization surged by 276 billion to 8,358 billion.

Credit ratings agency Standard & Poor's (S&P) has announced rating upgrade of Pakistan from B- to B with stable outlook after a period of 7 years. Previously, S&P had upgraded Pakistan's rating from CCC+ to B- in August 2009.

S&P has cited increased macroeconomic stability, improved domestic stability and recent successful conclusion of the International Monetary Fund (IMF) as key reasons for the upgrade. Further, S&P has raised Pakistan’s Gross Domestic Product (GDP) to over 5% from average of 4.7% during 2016-19.