PSX surges 78% in 2024, ranks second globally: report

KARACHI: The Pakistan Stock Exchange (PSX) emerged as the top-performing asset class in the country for 2024, with the benchmark KSE-100 Index soaring 78 per cent, making it the second-best performing market globally after Argentina, according to CEO of brokerage firm Topline Securities Mohammed Sohail.

Over the last 18 months, the PSX delivered an impressive 177 per cent return in USD terms (169 per cent in PKR), driven by macroeconomic stabilisation and improved external accounts, he said in his post on LinkedIn on Saturday.

Despite the rally, the PSX’s market capitalisation remains at $50 billion, significantly below its 2017 peak of $100 billion. The decline is due to rupee devaluation, large dividend payouts and fewer new listings. As a percentage of GDP, the PSX is at 11 per cent, compared to its 10-year average of 16 per cent and a peak of 29 per cent in 2017.

Trading activity surged to record highs, with average daily volumes in the ready/cash market reaching Rs54 billion ($190 million) in December, a significant rise from Rs22 billion earlier in 2024 and Rs10 billion in 2023.

Local mutual funds and insurance companies emerged as major buyers, capitalising on falling interest rates, while foreign investors were net sellers due to passive fund outflows. However, active Frontier funds showed confidence in the PSX, becoming net buyers in 2024.

Notable developments included the government raising Rs2 trillion through Sukuk bonds and the PSX witnessing seven new listings that generated 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 sustain its positive momentum if political stability continues, per Sohail’s estimates Ample liquidity in the system, alongside key events such as IMF reviews, privatisation efforts and potential credit rating upgrades, will be critical factors shaping the market’s trajectory.