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The Demand for Sukuk Surged 16-Fold

Explore the success of the inaugural PSX Sukuk Auction, where investors exceeded expectations by contributing Rs. 479 billion, surpassing the target by 16 times. Discover the significant impact on the financial market and the positive implications for economic activities.

The Demand for Sukuk Surged 16-Fold

On Friday, investors gave a lot of money, Rs. 479 billion, to the government in an auction at the Pakistan Stock Exchange. This was for a special type of investment called Ijarah Sukuk, and it was much more than what the government was expecting. The goal was Rs. 30 billion, but they got 16 times more than that, according to unofficial results.

This was the first time the Ministry of Finance did an auction at the Pakistan Stock Exchange. Before, they used the State Bank of Pakistan for these auctions. The official results from the ministry are not out yet.

Islamic banks bought the Ijarah Sukuk for one year at a rental rate linked to T-bills (Treasury bills) minus 100 basis points the week before at the Pakistan Stock Exchange.

Someone from the currency market said that this auction broke the control of banks in the bond market. It means that instead of putting money into government papers, funds are going to the private sector for businesses. The aim is to share the profits more widely so that regular people can invest as little as Rs. 5,000.

Debut PSX Sukuk Auction Raises Rs. 479 Billion, 16 Times Oversubscribed

One banker said that the auction was oversubscribed 13 times at Rs. 369 billion, meaning more people wanted to invest than the available amount.

Caretaker Prime Minister Anwaarul Haq Kakar and Caretaker Finance Minister Dr Shamshad Akhtar were there when the Ijarah Sukuk at the Pakistan Stock Exchange started. The Pakistan Stock Exchange highlighted this as a big step, as it was the first time they did the auction there due to changes in the rules.

During the event, Prime Minister Kakar said it was everyone’s responsibility to support these auctions, and it was a big achievement for the entire market. He credited the success to the country signing an IMF standby arrangement, following the annual budget for 2023-24, and making improvements in the economy.

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The ringing of the gong by PM Kakar symbolized progress and prosperity, showing a commitment to building a strong financial system that includes everyone. Finance Minister Akhtar called it a significant moment for the financial markets and the Pakistani economy. The CEO of the Pakistan Stock Exchange explained that changes in the rules allowed the auction to happen there, breaking the monopoly held by the State Bank.

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