In 2024, the Pakistan Stock Exchange (PSX) outperformed all other asset classes, with the KSE-100 Index climbing by 78%. This surge ranked the PSX as the second-best performing stock market worldwide, only behind Argentina, referencing a Topline Securities analysis.
Over the past 18 months, the PSX achieved a remarkable 177% return in USD terms (169% in PKR), spurred by macroeconomic stabilization and improved external accounts. Mohammed Sohail, CEO of Topline Securities, shared these insights in a LinkedIn post.
Read: PSX Soars to 116,000 Points as Rate Cut Speculation Fuels Market Optimism
Despite these gains, the PSX’s market capitalization stands at $50 billion, well below its 2017 high of $100 billion, impacted by the rupee’s devaluation, substantial dividend distributions, and a decline in new listings. The stock exchange’s market cap represents 11% of the GDP, against a ten-year average of 16% and a 2017 peak of 29%.
Trading volumes reached new heights, with daily transactions in the cash market averaging Rs54 billion ($190 million) in December, up significantly from Rs22 billion earlier in 2024 and Rs10 billion in 2023.
Local mutual funds and insurance companies have been prominent purchasers, taking advantage of dropping interest rates. Conversely, foreign investors sold off, driven by passive fund outflows. Nonetheless, active Frontier funds expressed their confidence in the PSX by becoming net buyers this year.
Significant developments included the government issuing Rs2 trillion in Sukuk bonds and the PSX hosting seven new listings, generating Rs8.4 billion—the highest in three years, as Sohail noted.
Looking to 2025, the PSX, with a current price-to-earnings ratio 6x, could maintain its upward trajectory if political stability persists. According to Sohail, the market’s future will heavily depend on factors like International Monetary Fund reviews, privatization initiatives, and possible credit rating improvements.
