By Staff Reporter
KARACHI: Pakistan’s benchmark KSE-100 Index hit a record high of 125,627.31 on Monday, closing the fiscal year 2024-25 with a remarkable 60% gain in rupee terms and 57% in US dollar terms, cementing its place among the world’s top-performing markets. The index rose one percent on the final trading day, propelled by robust year-end flows and China’s rollover of $3.4 billion in commercial loans.
Brokerage Topline Securities in a report said the KSE-100’s stellar run in FY25 builds on its momentum from the previous year, delivering a cumulative two-year gain of 203% in rupee terms and 206% in dollar terms. Globally, it ranked eighth in dollar performance for FY25 and claimed the top spot over the two-year period, according to Bloomberg data.
This ascent was driven by a confluence of factors: the successful completion of the first IMF review in March 2025 bolstered confidence in Pakistan’s economic reforms, while the State Bank of Pakistan slashed interest rates from 20.5% to 11%, nudging investors toward equities.
Fitch’s upgrade of Pakistan’s credit rating from CCC+ to B- enhanced its appeal to foreign capital, and improvements in fiscal discipline and external account stability provided a sturdy backdrop. Increased liquidity, as funds shifted from fixed income to stocks, further amplified the rally.
Trading activity mirrored this exuberance. In the cash market, average daily traded volumes rose 37% year-on-year to 631 million shares, with traded value jumping 80% to Rs28 billion per day. The futures market saw average volumes climb 26% to 196 million shares daily, with traded value up 60% to Rs10.1 billion per day, signaling broad participation in the market’s upward trajectory.
Investor dynamics shifted notably as well. Foreign corporates, net buyers of $152 million in FY24, turned net sellers in FY25, offloading $321 million due to FTSE index rebalancing. Local mutual funds led the charge on the buy side with net purchases of $227 million, followed by companies and individuals at $91 million and $66 million, respectively. Banks, insurance firms, and brokers, however, divested $49 million, $19 million, and $18 million, respectively.
Standout performers added luster to the market’s gains. Bannu Woollen Mills posted a 226% increase, National Bank rose 214%, and GlaxoSmithKline Pakistan gained 179%. Sectors like Vanaspati, Jute, and Woolen also outpaced the broader index, drawing significant investor interest.
“The local bourse wrapped up the fiscal year on a high note, carrying forward last week’s bullish momentum,” Topline Securities noted in its post-market report, crediting China’s loan extension for helping Pakistan meet the IMF’s $14 billion foreign reserves target.
Looking ahead to FY26, the market’s trajectory hinges on several pivotal developments. Timely IMF program reviews will be essential to sustain investor trust, though revenue shortfalls may test the government’s resolve; cuts to non-essential spending are expected to keep the primary balance on track. A potential credit rating upgrade to “B” could pave the way for Eurobond and Sukuk issuances, bolstering Pakistan’s finances.
Geopolitical currents, including Pakistan-U.S. relations under the Trump administration and tensions with India, will influence sentiment, as will Middle East conflicts driving Brent oil prices above $75 per barrel, a concern for Pakistan’s oil-dependent economy.
Progress in privatizing state-owned enterprises like Pakistan International Airlines and power distribution companies, alongside investments in projects like Reko Diq, could provide fresh impetus. The State Bank of Pakistan’s reserves, recently at $14 billion, are projected to hit $17.7 billion in FY26, any shortfall risks unsettling macroeconomic stability.
Despite its meteoric rise, the KSE-100 remains attractively priced, trading at a 2026 estimated price-to-earnings ratio of 5.7x, below its historical average of 7.0x. Pakistan’s stock market has showcased resilience and vigor in FY25, underpinned by policy reforms, monetary easing, and renewed investor confidence. While geopolitical and commodity challenges loom, its compelling valuation and ongoing economic stabilization efforts suggest potential for further gains in FY26, provided critical targets like IMF reviews and reserve levels are met.
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