The Pakistan Stock Exchange (PSX) has been named the world’s best-performing stock market in 2024, according to a report by Bloomberg. This recognition is attributed to significant foreign investment and positive economic indicators that have boosted investor confidence.
The PSX’s benchmark KSE-100 Index reached an all-time high of 81,459 points after a 1.1% increase, with intraday trading peaking at 81,865 points. This marks the highest level of foreign investment in over a decade, contributing to the PSX’s remarkable 30% growth this year, making it the top-performing market globally. Foreign investors have purchased $87 million worth of Pakistani shares in 2024, the highest amount since 2014.
Bloomberg reports that improved economic fundamentals and increased foreign participation are key drivers of the PSX’s strong performance. Notably, recent improvements in Pakistan’s current account balance and the central bank’s decision to lower interest rates have further supported market growth. Inflation, previously a concern, appears to be under control, enabling these rate adjustments and attracting more investment.
Pakistan was also reclassified by FTSE Russell from a secondary emerging market to a frontier market, effective September 23. While this shift may present challenges, it highlights Pakistan’s growing potential in the global investment landscape and is expected to attract further interest from international investors.
Key sectors like fertilizers and energy show growth potential, with Vanguard Group Inc. currently holding $160 million in Pakistani stocks and expected to increase its holdings. Prominent business leader Aqeel Karim Dhedhi expressed optimism about foreign investment in Pakistan, noting that the stock market remains relatively inexpensive compared to other global markets. He also highlighted that anticipated rate cuts by the US Federal Reserve could drive additional foreign inflows.
Despite certain economic challenges, including external debt and fiscal deficits, the overall outlook for the PSX remains positive. The steady rise in foreign investment and improved economic fundamentals suggest that Pakistan’s stock market will continue to thrive on the global stage.
On Friday, the PSX saw a significant rally, with the KSE-100 Index rising by 698.03 points, or 0.86%, to reach 82,157.31 points during intraday trading. This surge reflects strong market sentiment and investor confidence in Pakistan’s economic recovery. The index also reached an intraday high of 82,372.19 points, with total trading volume hitting 81.8 million shares valued at Rs7.7 billion.
Earlier, the KSE-100 index surged nearly 1,500 points following a reported current account surplus of $75 million for August 2024. The market’s momentum was further supported by an increase in net foreign direct investment, climbing to $214 million in August from $136 million in July.
Key sectors such as fertilizers, banking, and oil and gas development attracted significant interest, with companies like Fauji Fertiliser, Engro Fertilizers, and Meezan Bank contributing notably to the index’s gains. Ahsan Mehanti, Managing Director of Arif Habib Corp, attributed the bullish sentiment to a rally in global equities and favorable economic data.
The expectations of an International Monetary Fund (IMF) $7 billion Extended Fund Facility (EFF) approval and rising crude oil prices have also bolstered market gains. As reported, the KSE-100 index is nearing the 82,000-point level for the first time, driven by positive economic indicators and hopes of lower interest rates.
