Bloomberg / Karachi
Pakistan stocks rallied despite a broad equity selloff in Asia on hopes an impending vote that will likely elect opposition leader Shehbaz Sharif as the next prime minister would bring political stability.
The KSE-100 Index jumped 3.8% on Monday to post its biggest gain since April 2020, after former cricket star Imran Khan was ousted in a no-confidence vote that ended his four-year run. The nation’s currency also climbed.
Pakistan’s parliament later elected Shehbaz Sharif as prime minister, ending weeks of political turmoil.
A reduction in political uncertainty is helping investor sentiment, said Mohamed Sohail, chief executive officer at Topline Securities in Karachi.
Meanwhile, Pakistan’s top central banker pledged policy actions “on a timely basis” to ensure stability amid a political shakeup and deteriorating economy.
“I have a broader message to the investor community, and that is that such political processes are not uncommon in democracies,” State Bank of Pakistan governor Reza Baqir said in a Bloomberg Television interview on Monday. “It is important that economic policy making institutions act on a timely basis to ensure that the goal of financial stability remains.”
Monday’s gains in Pakistan stocks came even as a surge in US Treasury yields triggered losses across Asian markets. The KSE-100 Index has now erased all its losses for 2022 and is up 3.5% year-to-date.
A united opposition bloc cobbled together 174 lawmakers to vote against Khan after midnight Sunday in Islamabad, two more than required to remove Khan from office. His downfall was accelerated by inflation running faster than 12%, the rupee trading near a record low to the dollar and foreign reserves shrinking.
“The market is rejoicing the rare smooth handover of power in the lower house despite last night’s protests and seemingly confrontational approach by former PM Imran Khan,” said Faisal Bilwani, head of international sales at Alfalah CLSA Securities. Bets on swift IMF negotiations and easing commodity prices are also helping revive confidence, he said.
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