Pakistan stocks extend rally, KSE-100 jumps 750pts

September 20, 2024 (MLN): Pakistani stocks extended their rally on Friday as a fall in bond yields and improving macro-economic indicators boosted sentiment.

The benchmark KSE-100 Index rose 750.44 points or 0.92% to 82,209.72 as of 11:35am.

Traders have also ramped up bets for further outsized interest rate cuts by the central bank after the State Bank of Pakistan (SBP) slashed yields on Pakistan Investment Bonds (PIBs) by as much as 335bps in yesterday's auction.

The stock index is up a significant 19,759 points or 31.6% so far this year. Despite the rally, valuation metrics suggest stocks are still cheap compared to historic levels and its peers.

The gauge's forward price-to-earnings ratio — current stock's price over its predicted earnings per share — is still well below its historical average. This means its earnings growth has far outpaced the recent price rally.

The index currently trades at a 12-months forward price-to-earnings ratio of 4.7, a 49% discount to its average of 9.3 times forward earnings since 2005, according to data compiled by MG Research.

Globally, traders have been put in a bullish mood by the Federal Reserve's decision to go big on its first reduction since the start of the Covid pandemic, opting for 50 basis points instead of 25.

The US stock benchmark S&P 500 climbed 1.7% to notch its 39th record in 2024, extending this year’s surge to about 20%.

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