Pakistan’s billion-dollar firms surge in PSX rally

The Pakistan Stock Exchange (PSX) has witnessed a historic bull run over the last 1.5 years, leading to an unprecedented surge in the market value of several publicly listed companies. This stock market boom has catapulted 15 companies into the coveted “billion-dollar club”, a sharp increase from just three companies that held the status in 2023.

Currently, nine companies boast market capitalizations between $1 billion and $1.7 billion, while four have crossed the $2 billion mark. Notably, United Bank Limited (UBL) has surged past the $3 billion threshold, and Oil and Gas Development Company (OGDC) has touched a glittering $4 billion, making it the most valuable firm on the exchange.

The rise is even more dramatic when viewed in short-term perspective. In August 2024, only six companies were valued at over $1 billion, and just one had crossed $2 billion. The rapid transformation is now redefining Pakistan’s corporate landscape.

List of top companies by market value

• $1-1.7B tier: Engro Fertilizers (EFERT), National Bank of Pakistan (NBP), Bestway Cement, Colgate-Palmolive Pakistan, Pakistan Tobacco Company, Habib Bank Limited (HBL), MCB Bank, Nestlé Pakistan, and Pakistan Petroleum Limited (PPL).
• $2-2.7B tier: Lucky Cement, Fauji Fertilizer Company (FFC), Meezan Bank, and Mari Petroleum Company Limited (Mari Energies).
• $3B & above: United Bank Limited (UBL), and Oil and Gas Development Company (OGDC).

These 15 companies now collectively account for 44% of the PSX’s total market capitalization, contributing nearly $27 billion out of the $61 billion overall valuation.

Why share prices are rising

Several macroeconomic and policy-driven factors have combined to boost investor confidence and fuel the Pakistan Stock Exchange’s (PSX) recent rally.

Analysts point first to macroeconomic stabilization. Tight monetary policy and improved fiscal management have helped bring inflation under control and stabilize the exchange rate. A relatively stronger Pakistani rupee has also reduced import costs, supporting corporate earnings across multiple sectors.

International support has played a role as well. The successful completion of Pakistan’s loan program with the International Monetary Fund (IMF), along with a commitment to structural reforms, has reassured global investors and spurred foreign portfolio inflows into the market.

On the corporate front, improved earnings and dividends have strengthened valuations. Companies in key sectors such as banking, energy, and cement have reported record profits, allowing for higher dividend payouts that have attracted more investors.

Expectations of a rate-cutting cycle have also shifted investor preferences. With returns from fixed-income instruments likely to decline, more capital has flowed into equities, boosting demand for shares.

Investor sentiment has been further lifted by improving political stability and a clearer economic direction. Both retail and institutional investors, including overseas Pakistanis, have shown renewed trust in the market.

Finally, the government’s push to privatize state-owned enterprises and strengthen capital markets has encouraged broader participation, providing additional momentum to the PSX’s upward trend.

Market analysts suggest that the current momentum could sustain if macroeconomic stability continues and corporate earnings remain strong. However, they also warn of potential headwinds, including political uncertainty, global oil price fluctuations, and external debt repayment.

Still, with 15 companies now in the billion-dollar club—a fivefold increase in just 18 months—the PSX has firmly cemented its position as one of the top-performing frontier markets.