karachi stocks hit historic high the karachi stock exchange (kse) has recorded its largest single day gain  surging 3.5% to a new high.  the index rose 225.79 points in four hours of furious trading  with many investors optimistic that political stability could bring an economic boom. the kse index closed at 6709.93 - an overall gain of nearly 400 points in the first two trading days of the week. energy and telecommunication stocks performed particularly well  recording an 8%-10% rise since monday morning.  in 2002  the kse was the world s best performing stock market  with the index rising 112%.  pakistani investors are expecting the kse to repeat  if not improve on  its 2002 performance. jubilant investors danced on the streets as the market closed for the day on tuesday  confident that the boom will continue at least until the public holiday on 22 january. others  however  who had stayed out fearing an imminent collapse because of prices overheating  continued to warn that the  bubble may burst any time .  that s rubbish   kse chairman yaseen lakhani told the bbc news website.  whenever the market reflects pakistan s true economic reality  it is described as a bubble.  mr lakhani feels that the market has risen on the basis of solid economic growth and its current level rests on sound foundations.  market analysts are inclined to agree with mr lakhani  arguing that there are a number of major factors behind the kse s performance. analysts argue that a steady improvement in pakistan s credit ratings by international credit rating agencies has finally begun to register in the market. standard & poor s upgraded pakistan a few weeks ago. there are indications of yet another upgrade by the end of february.  then  say analysts  there is corporate profitability in the current fiscal year  which has gone up by 27% from last year.  coupled with the 7% gdp growth expected by june this year  i am least surprised at the market s performance   says mr lakhani. one leading karachi broker said the real reasons may be political.  if you file a $1.3 trillion case against saudi money after 9/11  arab money will not go to the us any more.  a lot of arab money  he says  has already gone to malaysia and indonesia. pakistanis are now hoping that energy and telecoms  two of the strongest sectors in pakistan  draw some of the arab money to the kse.  locally  too  say analysts  recent political developments have worked to the market s advantage.  an anti-musharraf campaign threatened by the mma  a countrywide alliance of religious parties  has fizzled out. the release of asif zardari  former prime minister benazir bhutto s husband  has eased political tensions between the military-backed government and the opposition pakistan people s party. most importantly  say analysts  the failure of talks between india and pakistan on the baglihar dam in indian-administered kashmir has not automatically led to heightened tensions. this  they say  indicates that neither country is interested in raising the temperature at this stage  irrespective of the state of their disagreements. the market is abuzz with speculation that substantial investment may now start to flow in from the us  a country seen locally as deeply interested in defusing tensions between the south asian neighbours.  you can call it a peace dividend   smiles one broker.  let us see how long one can reap its benefits.