Pakistan's stocks deliver 84% return in 2024, highest since 2002

Pakistan's stock market delivered an impressive return of 84% in CY24, with the benchmark KSE-100 index closing at 115,127 points.

This marks the highest annual return since 2002 when the index surged by 112%.

Analysts attribute the exceptional performance to improving macroeconomic indicators under the new IMF program, which included falling inflation, declining yields on fixed income, a significant monetary easing of 900 basis points by the central bank, improved external accounts, a stable currency, and political stability.

Market capitalization of the KSE-All grew by 61% during CY24, reaching a record PKR 14.6 trillion.

The market capitalization peaked at an all-time high of PKR 14.8 trillion on December 16, 2024.

In USD terms, the market capitalization closed at USD 52.3 billion, reflecting a 63% increase over the year.

The market experienced robust activity throughout the year, with average trading volumes hitting an unprecedented 565 million shares.

Additionally, the average traded value was elevated at PKR 22 billion, the highest since CY07.

Muhammad Sohail, CEO at Topline Securities, said the Pakistan Stock Exchange experienced a remarkable comeback in 2024, following years of lackluster performance.

“Over the past 18 months, the PSX has been the world's top-performing market with a 178% gain, the strongest performance in Pakistan's 77-year history over such a short period”.

Pakistan stocks are still trading at an average forward P/E ratio of 6.3x, indicating potential for further growth.

Initial Public Offerings

PSX saw an increase in offerings in 2024, with seven IPOs, including two on the GEM Board, compared to just one IPO in the previous year.

These offerings raised PKR 8.4 billion from investors, the highest level since 2021.

One significant development at the PSX in 2024 was the listing of government shariah-compliant bonds/sukuks.

Through 15 auctions, the government raised PKR 2 trillion, although secondary market trading remained thin with volumes of less than PKR 163 million per day until December 16, 2024.

Mutual Fund and Insurance Companies

Local mutual funds and insurance companies became major buyers in Pakistan's stock market in 2024, taking advantage of falling interest rates, while foreign investors were net sellers due to passive fund outflows.

According to data compiled by Topline Securities, mutual funds recorded net buying of $183 million (PKR 51 billion) in 2024, the highest since 2017. This shift was mainly from fixed-income instruments to equity funds because of lower interest rates.

The insurance sector was the second-largest net buyer in 2024, after three years of net selling, with net purchases of $60 million (Rs17 billion).

Local mutual funds and insurance companies absorbed the selling of around $210-220 million from three international passive funds exiting or planning to exit Pakistan in 2024, including iShares Frontier, Select EM ETF, and Vanguard.

Pak Rupee

The Pakistani Rupee (PKR) appreciated by 1.2%, bolstered by a strong external position marked by a current account surplus of USD 646 million in the first 11 months of CY24, compared to a deficit of USD 1.1 billion in the same period last year.

Higher remittances and an increase in the State Bank of Pakistan's reserves to USD 11.9 billion from USD 8.2 billion in December 2023 also supported the currency's stability.

The closing exchange rate was PKR 278.55, showing a 0.2% decline in December 2024 but a 1.2% increase over the entire calendar year.