Why Pakistan's stock market was the best performer in fiscal year 2023-24

The Pakistan Stock Exchange's benchmark KSE-100 index closed at 78,444.96 points on June 28 — the last trading day of fiscal year 2023-24. Compared to the close of 41,452.69 points in FY23, it amounted to a 94% return in USD terms.

No other index's returns even came close.

The second-best performing index — Turkey's BIST 100 — gained around 47%.

Pakistan's stock market performed so well for a number of reasons, including the fact that it was at its lowest valuation at the start of FY24. This means that shares were cheaper but were expected to give high returns.

So, when the International Monetary Fund (IMF) approved a nine-month StandBy Agreement in July 2023, and the country took steps to strengthen its economy, its economic outlook improved. Consequently, share prices went up and the stock market rose.

Meanwhile, the USD-PKR exchange rate, which had been volatile for months, started stabilizing in September after the government launched a crackdown against those dealing in illegal currency trade. The country's inflation also started easing from a record high of 38% in May 2023 to below 20% in April 2024.

This raised expectations that Pakistan's central bank would start cutting the interest rate that had been at a record 22% on the back of easing inflation. This would make it more attractive for people to start investing in the stock market instead of keeping their money in banks.

Analysts remain bullish about the KSE-100 index's performance in fiscal year 2024-25, with brokerage house Arif Habib Limited forecasting that it would cross the 100,000-points mark by June 2025.