Key points
- KSE-100 up 30pc, hitting record high
- Boosted by earnings, IMF deal, remittances
- Institutional investors driving rally
- Economic outlook improves, risks remain
The Pakistan Stock Exchange (PSX) has delivered a performance that many market watchers are calling historic — and potentially transformative for the country’s economic trajectory.
The benchmark KSE-100 Index has surged more than 30 per cent in the past six months, closing this week at a record intra-day high of 147,976 points, in what analysts describe as a clear signal of resurgent investor confidence and an improving macroeconomic outlook.
Market capitalisation has soared to nearly Rs17.6 trillion, with trading activity at multi-month highs as banks, energy producers, cement manufacturers, and technology firms lead the charge. The rally has added roughly 35,000 points since February, an acceleration not seen in decades. “Strong financial results boosted investor confidence,” said Ahsan Mehanti, chief executive of Arif Habib Commodities. “Speculation over positive outcomes of US investments under the Pak-US trade deal pushed stocks to record highs.”
Best fiscal-year performance in history
The current surge is the culmination of a recovery that began in mid-2023, when the KSE-100 was languishing near 41,000 points — its lowest in almost a decade — amid political instability, a foreign exchange crisis, and the threat of sovereign default. The benchmark index began a turnaround after Pakistan secured a critical International Monetary Fund (IMF) programme in July 2023, which unlocked multilateral and bilateral inflows, eased fears of a balance-of-payments collapse, and stabilised the rupee. By mid-2024, the market had regained its footing, posting its best fiscal-year performance in history, and setting the stage for the sustained rally now underway.
July’s record $3.2 billion in remittances, a firmer rupee, and sweeping power sector reforms — including the restructuring of Rs1.27 trillion in circular debt — have deepened the market’s optimism. The Special Investment Facilitation Council (SIFC)’s push to streamline approvals and fast-track foreign investment has reinforced the trend, with Gallup Pakistan’s latest survey showing business sentiment at its highest in four years.
The rally has not been driven by speculative retail trading alone. Institutional investments, mutual funds, savings schemes, and foreign portfolio investors have returned to the market, drawn by what they see as a rare alignment of policy stability, improving external balances, and credible growth prospects. “Investments from mutual funds are carrying the market forward,” noted independent analyst AAH Soomro. “This is about improving relationships abroad and a macroeconomic rerating at home.”
Far-reaching implications
Economists say the implications could be far-reaching if the momentum translates into the real economy. Higher equity valuations enable companies to raise capital through public offerings, enabling investment in manufacturing, infrastructure, and export capacity. The knock-on effects — job creation, technology upgrades, and productivity gains — can turn financial market gains into lasting economic benefits.
There are challenges ahead. Export growth remains uneven, global commodity prices are volatile, and political consensus is more than fragile. But the sustained nature of the rally, coupled with improving corporate earnings, has convinced many that this is more than a speculative spike. For policymakers, the task now is to harness the confidence on display on the PSX trading floors and channel it into long-term productive investments that can lift the broader economy.
“Return of the good times”
On the trading floor this week, the mood was buoyant. Brokers spoke of a “return of the good times,” a phrase not heard in years. If the KSE-100’s surge proves a bellwether, Pakistan may be on the cusp of the economic turnaround investors have been waiting for — a reminder that, as in markets worldwide, the stock exchange remains one of the most telling reflections of national economic health.
