United Bank becomes the fifth company to opt for stock-split in 2025

The Pakistan Stock Exchange (PSX) has seen a surge in stock split announcements in 2025, with five companies opting for the strategy to enhance market liquidity and investor accessibility. The latest announcement came from United Bank Limited (UBL), which declared a 2-for-1 split.

The move is aimed at improving price discovery and facilitating broader investor participation, market experts say. Unlike bonus shares, stock splits do not carry tax implications for either companies or shareholders, making them a cost-efficient way to adjust share affordability.

The Securities and Exchange Commission of Pakistan (SECP) has played a key role in encouraging stock splits, approving guidelines in December 2024 to streamline the process for listed companies. Since then, firms such as Arif Habib Corporation (10-for-1), Lucky Cement (5-for-1), Inter Market Securities (10-for-1), Systems Limited (5-for-1), and UBL have executed stock splits.

Among them, Arif Habib Corporation and Lucky Cement have reported substantial gains, rising 34.5% and 20.6%, respectively, since their announcements.

A stock split is a corporate action where a company increases the number of its outstanding shares, typically by dividing each existing share into multiple new shares. This reduces the price per share while maintaining the overall market capitalization of the company.

Analysts describe stock splits as more than just a numerical adjustment, noting their role in fostering market efficiency, improving liquidity, and signaling positive growth prospects. By increasing the number of shares in circulation without altering their overall value, stock splits provide a strategic advantage to companies with high share prices.

Internationally, stock exchanges often recommend stock splits as a means to maintain price stability and facilitate wider market engagement. In Pakistan, growing interest in the practice suggests companies and investors alike are recognizing its benefits.

Market observers expect the trend to continue as more firms seek to leverage stock splits as a tool for financial strategy and shareholder inclusion.