The Karachi Stock Exchange (KSE) hit the circuit breaker on Monday after the benchmark KSE-100 index surged nearly 9% in early trade, prompting a one-hour halt.
This sharp share in the stocks came after a ceasefire agreement between India and Pakistan, paired with financial support from the IMF.
Ceasefire brings relief, markets respond with a rally
Markets were quick to celebrate the cooling of tension between the two neighbours, especially after days of military escalation. The news that both countries would stop all military operations from Saturday evening brought a wave of relief to investors who had been spooked by last week’s developments.
IMF boost adds more optimism
Adding fuel to the rise was the IMF’s latest decision to disburse $2.4 billion to Pakistan as part of its ongoing economic and climate programs. This is the 24th bailout for Pakistan by IMF since 1958. However, Pakistan is due for $30 billion repayment in 2025 as part of its outstanding loan payment. Moreover, close to $100 billion repayment is due in 2027.
Last week’s dip turns into this week’s rebound
The KSE had dropped 6% last week as fears of conflict took over trading floors. But with the ceasefire holding, the market turned a full circle. Monday’s surge of over 9,100 points not only made up for recent losses but also turned the index positive for the year.
Talks between military officials underway
As of Monday noon, Directors General of Military Operations (DGMOs) from both sides were scheduled to speak, a key step in ensuring that the fragile peace holds.