Pakistan stock exchange (PSX) has emerged to be a mainstream in which investors and analysts have shown a keen interest. On March 24, 2025, the latest close for the benchmark KSE-100 index revealed it was 117,937.05, down 0.43% from the previous day. However, the PSX experience has been on the brighter side for the whole past year.
In October 2024, the KSE 100 index marked a breaking news record linking KSE 83,500 points. It was a milestone that showed the market is resilient and therefore, investors were getting more confident. In addition to that, there was a big foreign investment that came from the PSX as the largest foreign inflows ever since 2014 came up with an amount of $87 million.
On March 24, 2025, the latest close for the benchmark KSE-100 index revealed it was 117,937.05, down 0.43% from the previous day. However, the PSX experience has been on the brighter side for the whole past year.
There are several reasons for it becoming bullish. Stabilization of Pakistan’s economy, enhanced investor confidence, and liquidity infusion in the financial markets was contributed by the International Monetary Fund (IMF)’s approval of a $7 billion loan in September 2024. Moreover, the monetary policies of the State Bank of Pakistan, including interest rate adjustment, have enabled a conducive environment for investment.
The global economic landscape has left its mark on the performance of the PSX as well. A declining inflation has been due to falling global commodity prices and a stable exchange rate, as indicated by 1.5% inflation in February 2025, which has been the lowest in a decade. As inflation is reduced, the purchasing power of consumers rises, and the earnings on the corporate side go up, which also propels the stock market on the investors’ end.
Consumer Discretionary sector is projected to grow 59% annually over the next five years.
Further in sort, the PSX has grown due to sector-specific developments. For example, in the case of the Consumer Discretionary sector, we have an annual earnings growth of 59% over the next five years, which is more than 12x the historical growth rate of 13% per year. Having this optimistic viewpoint, it has resulted in an increase in this sector’s investments which took the stock prices above the line creating an upward momentum in the overall KSE-100 index.
However technological advancement and the fusion of financial services with fintech has in an efficient way strengthened market efficiency. The predictability on returns of the Pakistani stock market was improved by the adoption of machine learning models to predict stock prices using technical indicators and consequently attracted both domestic and foreign investors.
The initiatives taken by the government to encourage investment have also yielded crops. To facilitate investment, the Special Investment Facilitation Council (SIFC) has resulted in a 17 percent increase in the FDI from $1.9 billion in FDI inflows in July 2024. Boosted by the influx of FDI, this has positively influenced the stock market.
Foreign investment reached $87 million, the highest since 2014.
But it’s important to proceed cautiously with optimism in this growth. However, the PSX continues to show good performance while the economic challenges remain, still. Political volatility, unstable foreign exchange reserves, and external debt commitments are safety issues to sustain economic growth. Hence, it is necessary to maintain prudent fiscal and monetary policies to ensure that this positive trend lasts a long time.
The Pakistan Stock Exchange has recently displayed its strength by not falling to its lows, and how strategic versions of economic interventions have worked. Favorable monetary policies, large amounts of investments from abroad, sector-specific growth, the degree of technological advancement, and government facilitation have contributed effectively to the stock market growth of the country. But they will need to continue making continuous efforts to meet the current economic challenges that would help it maintain this momentum and translate stock market gains into general economic prosperity.
Disclaimer: The opinions expressed in this article are solely those of the author. They do not represent the views, beliefs, or policies of the Stratheia.
