Pakistani Stock Market is the World's Best Performing Market in 2024

by Riaz Haq

Jul 4

Pakistan's KSE-100 shares index topped 80,000 points on Wednesday as stocks climbed more than 600 points, making it the world's best performing stock market. The benchmark KSE-100 index has posted an annual return of 89% during FY24 (July 2023-June 2024) in PKR terms while in US dollar terms, the return was 94%, as the Pakistani rupee appreciated against the US dollar, according to Pakistani media reports.  This outstanding market performance is generally being seen as a consequence of a series of unpopular decisions  by the military-backed government of Prime Minister Shahbaz Sharif to carry out economic reforms to win the IMF support. 

Pakistani Stock Market Outperforms Asian Peers. Source: Bloomberg

Specifically, some analysts attribute the record increase in Pakistani share prices to multiple factors, ranging from the government's investor-friendly budget to the expectation of closing a longer term IMF deal. Others believe the relatively low price-earnings (P/E) multiples of Pakistani stocks make them attractive to investors. 

Awais Ashraf, director of research at AKD securities, attributed the stocks upward momentum to “expected entry into the larger IMF program and expected monetary easing boosting investor confidence in equities”, according to Dawn newspaper. 

“The majority increase in return is attributed to re-rating of Price to Earning (PE) from 2.2-2.4x in June 30, 2023 to 3.94x in Jun 28, 2024,” said a Pakistani investment firm Topline Securities in its report. It attributed the PE multiple re-rating to “improving economic indicators, i.e. increase in exports and remittances by 11% and 9%, respectively in 11MFY24, decline in inflation from peak of 38.0% in May-23 to 11.8% in May 2024.”

Foreign portfolio investors are coming back to Pakistan’s debt and equity markets after a prolonged absence, marking a significant shift in market sentiment, according to a report in The Express Tribune newspaper. The short-term external investment has surged by a remarkable 84%, catapulting to a 30-month high, now standing at Rs 501.30 billion (US$ 1.8 billion) .

There is a distinct difference in how the new budget, compliant with the IMF requirements, has been received by the ordinary public compared to the investor class. Higher taxes on consumption in the new budget have angered most consumers but the prospects of  lower fiscal deficits and significant macro-economic improvements are generally being welcomed by investors. The government, backed by the Pakistani military, sees the need to improve the macro-economic indicators as essential to improving the long-term health of the national economy. 

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  • Riaz Haq

    IMF's $7 billion bailout sends Pakistan stocks to new peak
    By Gibran Naiyyar Peshimam and Asif Shahzad

    https://www.reuters.com/markets/asia/imfs-7-billion-bailout-sends-p...

    IMF approves $7 billion bailout for Pakistan
    Pakistan's stock index hits record high of 82,905.73
    PM Sharif and IMF's Georgieva emphasize need for reforms
    ISLAMABAD, Sept 26 (Reuters) - Pakistan's benchmark share index (.KSE), opens new tab hit a life-time high in opening trade on Thursday, hours after the International Monetary Fund's board approved a long-awaited $7 billion bailout deal for the struggling economy.
    The IMF said the new programme will require "sound policies and reforms" to strengthen macroeconomic stability and address structural challenges alongside "continued strong financial support from Pakistan's development and bilateral partners".

    An immediate disbursement of about $1 billion will take place, an IMF statement said.
    Pakistan's stock benchmark index rose in early trade to a record high of 82,905.73 points, before reversing those gains later in the day to close 0.7% down at 81,657.
    "We will need to take difficult decisions if we want to make it our last programme with the IMF," Pakistan's junior finance minister, Ali Pervaiz Malik, told local Geo News TV on Thursday.

    Prime Minister Shehbaz Sharif thanked the IMF managing director Kristalina Georgieva and said the country would continue to implement the tough economic reform agenda, he told reporters in New York on the sidelines of United Nations general assembly on Wednesday.
    Georgieva congratulated Pakistan for moving forward with "home-defined" reforms.
    "The economy is on the sound path," she told reporters after the board meeting. "Growth is up and inflation is down," she said.
    Islamabad had been working on implementing conditions, which Sharif had previously called "strict" to secure the 37-month loan programme agreed in July. One condition was to secure additional external financing, which the country was struggling to do.
    Local media reported that Islamabad recently signed its most expensive commercial loan ever for $600 million at 11% interest as a last-ditch bid to cover the financing gap and secure board approval.

    Sep 26

  • Riaz Haq

    farrukh saleem
    @SaleemFarrukh
    1.PSX had a return of 80%
    2.Interest rate is down 2%
    3.Petrol price is down by Rs57/liter
    4.Inflation is down from 37% to 9.5%
    5.Sovereign credit worthiness has gone up a notch
    6.IMF on track
    7.Exports up $3B
    8.$12B rollover done

    https://x.com/SaleemFarrukh/status/1836725188643454998

    Sep 26

  • Riaz Haq

    See new posts
    Conversation
    Arif Habib Limited
    @ArifHabibLtd
    KSE100 Index recorded its highest-ever closing at 82,722

    KSE-100 index went up by 755 points (+0.92% DoD) to close at 82,722 pts.

    https://x.com/ArifHabibLtd/status/1841801335013859417

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    Arif Habib Limited
    @ArifHabibLtd
    AHL reported that this surge in sales is attributed to rising demand alongside a notable decline in the prices of Motor Spirit (MS) and High-Speed Diesel (HSD), which fell by 20.19% and 20.06% year-on-year, respectively.

    https://x.com/ArifHabibLtd/status/1841701062866051564

    Petroleum product sales surge 20% in September fueled by increased demand

    https://profit.pakistantoday.com.pk/2024/10/02/petroleum-product-sa...

    Pakistan's petroleum consumption hits 1.27 million tons, driven by falling prices and robust petrol and diesel offtake

    Petrol sales saw a remarkable 22% year-on-year rise, totaling 0.63 million tons in September 2024, up from 0.52 million tons the previous year. Meanwhile, HSD dispatches surged by 25% year-on-year, reaching 0.49 million tons in the same month.

    Conversely, Furnace Oil (FO) sales experienced an 18% decline, dropping to 0.07 million tons due to diminished demand for FO in power generation, compared to 0.08 million tons in September last year.

    On a month-on-month basis, petroleum product offtake increased by 5% from August’s 1.22 million tons, attributed to lower demand in August due to heavier rainfall.

    For the first quarter of FY25, total petroleum product sales fell by 3% year-on-year to 3.68 million tons, compared to 3.81 million tons in the same period last year. While sales of HSD and FO declined, petrol sales remained stable, with volumes recorded at 1.85 million tons for petrol, 1.42 million tons for HSD, and 0.21 million tons for FO.

    Company-wise, Pakistan State Oil (PSO) reported an 8% increase in offtake for September 2024, totaling 0.55 million tons. Additionally, HASCOL and Shell Petroleum saw substantial growths of 76% and 17% year-on-year, respectively, while Attock Petroleum Limited (APL) experienced an 8% decline in dispatches.

    Oct 3