Pakistan stock market sees best 9-month earnings since 2009

The Pakistan Stock Exchange (PSX) extended its bullish momentum as equities delivered their best 9-month performance since 2009, closing at 168,990 points, up 4% or 6,733 points, supported by improved investor sentiment.

During the outgoing week, the banking sector was the major contributor to the rally, adding 4,313 points to the index.

However, market participation weakened by 19.8% on a weekly basis, with an average daily traded volume of 1.8 billion shares, compared to 2.2 billion shares in the prior week.

On the macroeconomic front, inflation for September rose to 5.6%, marking the highest level in the past 10 months, following the recent flooding.

In anticipation, yields on one, three, six, and 12-month T-bills in the last auction increased by 41/20/21/19bps, respectively, reflecting investor expectations that the policy rate will remain unchanged in the near term.

On the currency front, the Pakistani rupee appreciated by 0.04% during the week against the US dollar, closing the week at 281.26.

An analyst from AKD Securities stated that the momentum in the KSE-100 is expected to continue, given the smooth completion of the IMF's second review, minimal flood impact, and improved credit ratings by global agencies, amid falling fixed income yields.

The investor sentiment is expected to further improve due to the increased likelihood of foreign portfolio and direct investment flows, driven by improved relations with the US and the KSA.

This outlook is supported by the lack of alternative investment avenues and the attractive valuation of local equities, with the KSE-100 trading at a multiple of 8.8x while offering a dividend yield of 6.7%, he said.

He added the overall market sentiment remains positive, with momentum expected to continue in the coming week, supported by improving investor confidence. Markets will remain attentive to upcoming IMF meetings that could shape the near-term economic outlook.

The KSE-100 Index is currently trading at a forward PER of 8.50x (2026) against its 15-year average of 8.59x, offering a compelling dividend yield of 6% versus the historical average of 6.13%, he added.