Pakistan stock market becomes fastest growing in South Asia in last 2 months; Pak netizens ask 'what about high inflation'

The benchmark index of the Pakistan Stock Exchange (PSX) is said to be the fastest growing in South Asia in last two months but the country's netizens say the growth indicators aren't suggesting any reasons to cheer this achievement. 

The index, which was at 50,000 in October, has crossed 66,000-mark in December. The reasons for the bullishness are investors expect an imminent cut in the central bank's policy interest rate, currently set at a record high 22% and inflation appears to have peaked, having slowed to 26.9% year-on-year in October.

Despite Pakistan's political and economic difficulties, the index has been on the rise after the International Monetary Fund (IMF) approved a $3 billion loan programme in July to avert a sovereign debt default.

Some analysts believe the market is welcoming a successful staff level agreement for the second tranche of funds under the current IMF Standby Arrangement, along with a expected disbursement of the funds in December and other foreign exchange inflow from multilateral institutions. Companies' strong profitability and dividend payouts are also enticing investors confidence, the analysts told Reuters.

However, Pakistanis said this growth in stock market means nothing because inflation is still very high and the country's GDP is showing no signs of growth. 

"Stock market has shown impressive performance but other indicators are on a continuous decline. Pakistan needs political stability the most," said an X user. 

"There are almost no exports no dollar remittance from abroad no economic activity yet the stock market is rising. Its just because all investments have shifted to stock market from real estate," commented another X user. 

"Masses living in miserable conditions inflation are sky rocketing staggering around 40% unemployment is on rampant, country is so polarized with zero political setup," said another netizen.

Some netizens said this is just a bubble being created by foreign investors and that it will burst pretty soon. 

Mari Petroluem, Pakistan's leading oil exploration firm, joined Billion Dollar Club at PSX on Monday.

Now, there are 7 listed companies having a billion dollar plus market value, namely OGDC, Colgate, Nestle,  Meezan, PPL, Pak Tobbacco, and Mari Petroleum

Interestingly, five months ago, there were only 2 listed companies (OGDC and Nestle) with market cap of more than $1 billion.

With inputs from Reuters