Retail investor wave fuels 40pc jump in stocks this year

Retail investors are helping extend Pakistan’s stock market surge, marking a rare moment of confidence in local shares after years of volatility and political uncertainty, reports Bloomberg.

The nation’s benchmark KSE-100 index has climbed roughly 40 per cent in 2025, making it one of Asia’s best-performing markets as government stability and rosy returns fuel enthusiasm among a typically risk-averse population. Individual traders are turning to equities in lieu of other investment options, with property prices stagnating and deposit rates halving in the past two years.

“We are now seeing a liquidity-led rally,” said Mohammed Sohail, chief executive officer at Topline Securities Ltd. “Unless that liquidity finds a new avenue, the markets will likely stay strong,” he said.

Small traders are eyeing domestic stocks as Pakistan’s economy regains ground after it came close to defaulting on its debt in 2023. S&P Global Ratings and Fitch Ratings upgraded the country’s ratings this year, citing improved fiscal management and reform momentum under Prime Minister Shehbaz Sharif’s International Monetary Fund-backed programmes.

In addition, efforts by Field Marshal Asim Munir, who is widely seen as the nation’s most powerful leader, to improve US ties have supported equities. Munir’s elevation to a new role until 2030 is also seen as prolonging stability.

Nearly 36,000 new trading accounts in the South Asian country were opened in the September quarter, compared to 23,600 new registrations just three months back, according to Topline Securities. Trading activity has also increased, with daily turnover on the Pakistan Stock Exchange topping $200 million in October, the highest since 2017, data compiled by Bloomberg show.

Jawad Khalid Mirza, a 44-year-old chief information security officer at Askari Bank Ltd, once dismissed the stock market as “a gambling den” that didn’t follow fundamentals, he said. But after discovering local “fin-fluencers” on Facebook, Mirza was persuaded by an analysis of National Foods Ltd to invest in the company, which makes the ketchup and spice packets he uses.

After years of constant shifts in political leadership, the nation is experiencing a period of steadiness that’s likely to continue for some time, according to Mattias Martinsson, chief investment officer of Stockholm-based fund Tunder Fonder AB. Ongoing crises have made companies more prudent at financial management, while the central bank has become more transparent.

Even so, inflation could spoil the party. Bloomberg Economics expects a further pickup in prices after they accelerated more than expected in October, which may keep the central bank from cutting interest rates again until June. Any flare-up after recent geopolitical tensions with India and Afghanistan could also weigh on sentiment.

Meantime, overseas investors appear to be calling time on the rally. Global funds have sold a net $308 million in local shares so far in 2025, their biggest annual outflow since 2018.

In order to be optimistic from here on, “you need to expect that the next 10 years for Pakistan will be better than the last ten,” said Martinsson, who has nearly a third of his investments in the country’s equities. “We could see even more gains in Pakistan, but they could be slower and steadier than what we saw in the last few years.”