Islamabad, Dec 31: The Pakistan Stock Exchange (PSX) had a remarkable 2024, with its benchmark KSE-100 Index delivering an impressive 84% gain in local currency terms, the highest percentage return since 2002. In US dollar terms, the return was 87%, positioning the KSE-100 as the second best-performing stock market globally, after Argentina, according to Topline Securities.
The robust performance was driven by improving macroeconomic conditions under the International Monetary Fund (IMF) program, including falling inflation, declining yields on fixed-income instruments, a 900 basis points reduction in the policy rate by the State Bank of Pakistan (SBP), improved external accounts, currency stability, and enhanced political stability.
PSX’s market capitalization surged by 63% to $52 billion, though it remains below its 2017 peak of $100 billion. Market cap to GDP rose to 12% from 9% in 2023, though still under the 10-year average of 16%. Trading activity also hit record levels, with daily average volumes in the ready/cash market rising 76% to 569 million shares and average traded value soaring 122% to Rs. 22 billion. The futures market experienced similar growth, with daily volumes up 68% and value up 80%.
The KSE-100 Index outpaced other local asset classes in 2024, outperforming Pakistan Investment Bonds (+27%), gold (+24%), and property (-11% to +14%). IPO activity increased significantly, with seven IPOs raising Rs. 8.4 billion, the highest since 2021. Government sukuk listings also marked a milestone, with Rs. 2 trillion raised through 15 auctions.
Local mutual funds and insurance companies emerged as major buyers, capitalizing on falling interest rates. Mutual funds made record net purchases of $183 million, while insurance companies contributed $60 million. This local buying absorbed $210-220 million in foreign outflows as three major international funds exited Pakistan.
Despite the foreign outflows, net foreign portfolio investment (FIPI) stood at -$89 million, showcasing the resilience of local market participants in absorbing significant external selling pressures.
