- PSX’s market capitalization remains at $50 billion despite the rally.
- The decline is due to rupee devaluation and large dividend payments.
- It could sustain a positive rebound if political stability continues.
KARACHI: The Pakistan Stock Exchange (PSX) has eclipsed other asset classes in the country by 2024, with its benchmark KSE-100 index rising 78%.
This notable performance positioned PSX as the second best performing stock market worldwide, only behind Argentina, according to The newsciting a report by Topline Securities.
Over the past 18 months, the PSX has returned an impressive 177% in dollar terms (169% in PKR), driven by macroeconomic stabilization and improving external accounts, said the CEO of brokerage firm Topline Securities. , Mohammed Sohail, in a post on LinkedIn on Saturday.
Despite the rally, the PSX’s market capitalization remains at $50 billion, significantly below its peak of $100 billion in 2017. The drop is due to the devaluation of the rupee, large payments of dividends and the lowest number of new contributions. As a percentage of GDP, the PSX is at 11%, compared to its 10-year average of 16% and a peak of 29% in 2017.
Trading activity reached record levels, with average daily volumes in the ready/spot market reaching Rs 54 billion ($190 million) in December, a significant increase from Rs 22 billion at the beginning of 2024 and 10 billion rupees in 2023.
Local mutual funds and insurance companies emerged as major buyers, taking advantage of falling interest rates, while foreign investors were net sellers due to passive outflows of funds. However, Frontier active funds showed confidence in the PSX and will become net buyers in 2024.
Notable developments included the government raising Rs 2 trillion through Sukuk bonds and the PSX witnessed seven new listings generating Rs 8.4 billion, the highest in three years, Sohail explained.
Looking ahead to 2025, the PSX, which is currently trading at a price-to-earnings (PE) ratio of 6x, could maintain its positive momentum if political stability continues, according to Sohail estimates. Ample liquidity in the system, along with key events such as the International Monetary. Fund reviews, privatization efforts and potential credit rating upgrades will be critical factors shaping the market’s trajectory.
