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Pakistan's benchmark share index rose as much as 2% on Monday to cross 48,000 points for the first time since August 2021, according to the exchange's website and Eikon data.
The KSE-100 index has risen sharply since the end of June as talks with the International Monetary Fund (IMF) over the resumption of a bailout plan started, following which other funding avenues were unlocked.
The index has soared nearly 20% since the start of the year - on track for its best annual performance since 2016.
Pakistan's international bonds also enjoyed healthy gains on Monday, with the 2027 issue up 1.4 cents to change hands at 52.6 cents in the dollar, Tradeweb data showed.
Pakistan and the IMF agreed on a financial package earlier this month, with the central bank receiving $1.2 billion from the Fund as the first tranche of a $3 billion bailout.
Mohammed Sohail, chief of Karachi-based investment house Topline, said the stock market gains were also driven by optimism over more investment from Saudi Arabia and the United Arab Emirates.
Pakistan is also hosting a national summit on investment in its large untapped mineral resources this week, which, Sohail said, had also boosted investor confidence.
The central bank will also publish its latest interest rate decision on Monday. Analysts expect policy makers to raise the key interest rate, which stands at 22%, to tackle persistently high inflation and amid IMF pressure on the country to continue its monetary tightening cycle.
The KSE-100 was close to the 41,000 mark at the end of June just before the IMF agreement. It hit a 2-1/2-year low of just over 38,000 points in January.
The new Stand-By Arrangement (SBA) for $3 billion over nine months, breathed new life into the struggling economy, which was teetering on the brink of default. (Reporting by Gibran Peshimam, additional reporting by Karin Strohecker, editing by Sudipto Ganguly, Eileen Soreng and Sharon Singleton)