PSX outperforms all asset classes in FY25, ranks third among global equity markets
KSE-100 delivers 55.5% dollar return, beating gold, bonds, and forex as long-term outlook remains bullish
Haris Zamir
Business Editor
Experience of almost 33 years where started the journey of financial journalism from Business Recorder in 1992. From 2006 onwards attached with Television Media worked at Sun Tv, Dawn Tv, Geo Tv and Dunya Tv. During the period also worked as a stringer for Bloomberg for seven years and Dow Jones for five years. Also wrote articles for several highly acclaimed periodicals like the Newsline, Pakistan Gulf Economist and Money Matters (The News publications)
The Pakistan Stock Exchange (PSX) outperformed all major asset classes during the fiscal year 2024–25 (FY25), emerging as the third-best performing equity market in the world, according to a report by Arif Habib Ltd. and data compiled from global securities indices.
The report showed that the benchmark KSE-100 index returned 55.5% in dollar terms, trailing only Ghana, which led global markets with a 140.7% gain, and Slovenia, which recorded a 56.7% return. In comparison, India, ranked 61st, delivered a return of just 3.7% in the same period.
The PSX’s stellar performance eclipsed returns across all domestic asset classes. Gold appreciated by 47.56%, Treasury bills by 12.68%, Defense Savings Certificates (DSCs) by 12.61%, bank deposits by 12.60%, Pakistan Investment Bonds (PIBs) by 11.97%, and the USD/PKR exchange rate saw a depreciation of 1.91%.
Even historically strong-performing instruments like gold and T-bills failed to match the equity market’s rally. The report emphasized that the compound annual growth rate (CAGR) of the KSE-100 index surpasses all other asset classes across long-term benchmarks, ranging from five-year to 20-year holding periods. This reaffirms the PSX as the most lucrative asset class for long-term investors in Pakistan.
Looking ahead, the outlook for FY26 remains optimistic. Real GDP growth is projected at 3.34%, primarily driven by a revival in the agriculture sector, with services and industry expected to contribute to overall momentum amid a more stable macroeconomic environment.
On the external front, the current account, which posted a projected surplus of $1.6 billion in FY25, is expected to slip into a modest deficit of $1.6 billion in FY26. This reflects a gradual pickup in import demand as economic activity gains pace. However, remittance inflows are projected to rise to $39.3 billion, supported by an expanding base of overseas workers and continued global labor demand.
Despite this slight external pressure, capital markets remain attractively valued. The KSE-100 index is trading at a forward price-to-earnings ratio (PER) of 6.4x for 2025, significantly below its 10-year average of 8.0x. Additionally, the market offers a dividend yield of 8.4%, compared to the historical average of around 6.5%, further enhancing its appeal to both local and foreign investors.
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