- PSX’s market cap remains at $50 billion despite the rebound.
- The decline is due to the devaluation of the rupee and large dividend payments.
- It could maintain a positive recovery if political stability continues.
KARACHI: The Pakistan Stock Exchange (PSX) has outperformed other asset classes in the country for 2024, with its benchmark KSE-100 index up 78%.
This remarkable performance has positioned PSX as the second best performing stock market in the world, behind Argentina, according to Newsciting a Topline Securities report.
Over the past 18 months, PSX has generated an impressive return of 177% in dollar terms (169% in PKR), thanks to macroeconomic stabilization and improving external accounts, the company’s CEO said on Saturday brokerage Topline Securities Mohammed Sohail in a message on LinkedIn.
Despite this rebound, PSX’s market capitalization remains at $50 billion, significantly below its peak of $100 billion in 2017. This decline is due to the devaluation of the rupee, large dividend payments and the decrease in new registrations. As a percentage of GDP, PSX stands at 11%, compared to a 10-year average of 16% and a peak of 29% in 2017.
Trading activity reached record levels, with average daily volumes in the loan/spot market reaching 54 billion rupees ($190 million) in December, a significant increase from 22 billion rupees earlier in 2024 and 10 billion rupees in 2023.
Local mutual funds and insurance companies have become significant buyers, taking advantage of falling interest rates, while foreign investors have been net sellers due to passive fund outflows. However, active Frontier funds have shown confidence in the PSX, becoming net buyers in 2024.
Notable developments include the government raising Rs 2 trillion through Sukuk bonds and the PSX registering seven new listings that generated Rs 8.4 billion, the highest in three years, Sohail explained.
Looking ahead to 2025, the PSX – which currently trades at a price-to-earnings (PE) ratio of 6 – could maintain its positive momentum if political stability continues, according to Sohail’s estimates. Abundant liquidity in the system, alongside key events such as the international currency crisis. Fund valuations, privatization efforts and potential credit rating upgrades will be critical factors shaping the market’s trajectory.