Pakistan’s stocks on Tuesday surged by almost 900 points by midday, as investors continued to rush into rate-sensitive sectors amid hopes that the central bank’s monetary policy would see more loosening this year, boosting economic growth, traders said.

Pakistan Stock Exchange’s (PSX) benchmark, KSE-100 Shares Index jumped 897 or 1.04%, to stand at 85,807 points at 12:13pm as against the previous close of 84,910.29 points.

Analysts say certain sectors, such as technology, real estate, financials, utilities, and consumer discretionary, tend to benefit particularly from rate cuts, allowing investors to capitalise on these dynamics during periods of economic change.

On Monday, equities raced past the record high of 84,900-points mark, driven by a massive rally in the energy sector and an evergrowing optimism over potential interest rate cuts. The index ended at an all-time high of 84,910.29 points, up 1,378.34 points, or 1.65%.

Investors have upped their bets on the scope of the State Bank of Pakistan (SBP) extending its ongoing hawkish monetary policy as inflation has been retreating steadily over the past months, according to analysts.

Moreover, there are expectations of a policy rate cut of up to 400 basis points by December, as the room for easing exists.

The market is abuzz with speculations that the SBP could revise the interest rates downward even before its next scheduled meeting.

They added that the much-anticipated beginning of the central bank’s long-awaited rate-cutting cycle has also rekindled foreign interest in the country’s capital market.

CPI-based inflation fell to 6.9% year-on-year in September 2024, the lowest since January 2021, down from 9.6% in August, driven by the high base effect, easing commodity and energy markets, and a stable currency, according to the Pakistan Bureau of Statistics (PBS).

Last month, the SBP’s Monetary Policy Committee slashed the key policy rate by 200bps to 17.5% from 19.5%, citing a steep fall in both headline and core inflation over the past two months.

Federal Minister for Commerce Jam Kamal Khan on Monday emphasized the need to increase Pakistan’s rice exports and ensure compliance with European food safety standards, citing the country’s 25% share of the European rice export market.

He said during a meeting with the representative of the Rice Exporters Association of Pakistan (REAP), a news release issued here.

Pakistan holds 25% of the European rice export market compared to India’s 16%. To maintain this competitive edge, Jam Kamal highlighted the necessity of collaboration between the government and exporters.

Rice exports play a vital role in Pakistan’s economy, ranking second in export value after cotton. Rice exporters are a primary source of revenue and employment, with the government aiming to increase exports from $4 billion to $6-7 billion in the near future.

“We are focusing on improving our standards to meet international food safety requirements, especially in Europe,” Jam Kamal added.

Recent diplomatic developments include discussions with Malaysian Prime Minister Anwar Ibrahim on expanding rice and meat exports to Malaysia. A Pakistani business delegation, led by Jam Kamal, will visit Malaysia in November to explore new opportunities.

Malik Faisal Jahangir, Chairman of the Rice Exporters Association of Pakistan (REAP), said that Pakistan’s rice exports face fewer regulatory challenges, with only 74 Rapid Alerts for pesticides were issued last year, compared to 264 for India.

Pakistan remains one of the lowest-risk countries concerning food safety standards. However, Jahangir expressed concern over potential harm to Pakistan’s export reputation from negative campaigns.

Jam Kamal stressed educating farmers to improve rice production quality and reduce alerts.

Balochistan, despite producing a small quantity of rice, cultivates some of Pakistan’s best organic rice.

He called for a joint effort by stakeholders to develop a five-year strategy enhancing Pakistan’s rice export capacity and compliance with international standards.

Jam Kamal urged REAP to propose actionable suggestions for achieving the government’s export targets within the next year, emphasizing the importance of addressing food safety concerns, especially in the European Union, where standards are becoming increasingly stringent.—APP