Pakistan's stock market is soaring to record levels and could rise further following Saturday's announcement of national budget for 2007-08, which envisages record development spending and relief to low-income people, The Wall Street Journal reported on Monday.
"The budget, designed to sustain robust growth and appeal to voters, greatly increases the amount of development spending but imposes no changes in taxes and on capital market activities," WSJ correspondent said in a dispatch from Islamabad.
The main reason for the upswing in the market activity was that President Pervez Musharraf's government economic policies--a successful privatisation programme, financial deregulation and other changes--have worked.
"The result: an unprecedented influx of fresh foreign and local investment and sharply reduced government debt are paving the way for longer term expansion," WSJ correspondent Zahid Husain said. "Structurally, the economy now is on much firmer footing to sustain growth for the next three to five years," said Muddassir Malik, Director of Karachi-based BMA Capital Management, which runs the $30 million Pakistan Opportunity Fund, the country's first off-shore, dollar-based fund.
That view expressed to WSJ is reflected in a surging stock market. The Karachi Stock Exchange's 100 index has jumped more than 32 percent this year, reaching a record 13274.87 points on Friday. That compares with a gain of 7.7 percent in the Standard & Poor's 500-stock index.
The dispatch said, "The spurt on Pakistan's stock exchange has been powered with record inflow of foreign funds, which is expected to exceed $800 million in the year ending June30.
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