PSX surges 78% in 2024, secures second place worldwide: report

• PSX’s market capitalization remains at $50 billion. dollars despite the rally.
• The fall is due to rupee depreciation, large dividend payments.
• It could sustain a positive rally if political stability continues.
  

KARACHI: The Pakistan Stock Exchange (PSX) has outperformed other asset classes in the country for 2024, with the benchmark KSE-100 rising 78%.

This remarkable performance placed the PSX as the second best performing exchange globally, trailing only Argentina, according to The Newsciting Topline Securities report.

Over the past 18 months, the PSX has delivered an impressive 177% return in USD terms (169% in PKR terms), driven by macroeconomic stabilization and improving external accounts, brokerage Topline Securities CEO Mohammed Sohail said in a LinkedIn post on Saturday .

Despite the rally, PSX’s market cap remains at $50 billion, well below its 2017 peak of $100 billion. The decline was due to rupee depreciation, large dividend payouts and fewer new listings. As a percentage of GDP, PSX stands at 11%, compared to a decade average of 16% and a peak of 29% in 2017.

Trading activity soared to record highs, with average daily volumes in the ready/cash market reaching Rs 54 billion ($190 million) in December, a significant increase from Rs 22 billion earlier in 2024 and Rs 10 billion in 2023.

Local mutual funds and insurance companies emerged as the main buyers, capitalizing on the drop in interest rates, while foreign investors were net sellers due to passive capital outflows. However, active Frontier funds showed confidence in the PSX and became net buyers in 2024.

Notable developments included the government raising Rs2 trillion through Sukuk bonds and the PSX with seven new listings bringing in Rs8.4 billion, the highest in three years, Sohail explained.

Looking ahead to 2025, the PSX — currently trading at a price-to-earnings (PE) ratio of 6x — could maintain its positive momentum if political stability continues, Sohail estimates Abundant liquidity in the system alongside significant events such as the International Monetary Fund’s assessments, privatization efforts and possible credit upgrades will be critical factors shaping the course of the market.