Moaaz Manzoor

In an unprecedented development, the Pakistan Stock Exchange (PSX) has crossed 91,000 points, signaling a robust bullish future driven by economic stability, policy reforms, and renewed investor confidence, reports WealthPK.

The strengthening of the rupee underpins this rally, prudent policy measures, and growing investor confidence, which experts believe will fuel the market’s upward trajectory over the next two to three years. In an interview with WealthPK, Syed Kashan Kazmi, Managing Director of Integrated Equities Limited, attributed the rally to three critical tiers of investor trust: external factors beyond the stock exchange, stock market’s environment, and, most crucially, government policy. “We are witnessing a sustainable bullish rally which will continue for the next two to three years if no political or economic upheaval occurs,” he said. Kazmi emphasized that the stability of currency, coupled with the State Bank of Pakistan’s well-timed reductions in interest rates, had significantly bolstered investor sentiment and activity in the stock market.

Furthermore, he highlighted the role of recent trade and fiscal policies, such as the government’s restrictions on imports and the Pak-Afghan transit trade, which have mitigated the flight of dollars out of Pakistan and contributed to an increasingly stable currency. Kazmi noted that adherence to the International Monetary Fund’s (IMF) three-year program is another promising factor, likely to bring short- to medium-term gains for the economy. If the government stays committed to the IMF program, it will lead to additional gains, he said. He also praised the governments’ ongoing efforts to improve documentation and increase the tax-to-GDP ratio, the steps that enhance market transparency and support investor confidence. As these measures take effect, the interest rate could drop to around 12 percent, making the PSX an even more attractive destination for investment, he said optimistically.

“The economy is in serious hands, and prudent steps are being taken,” he concluded, projecting a bright outlook for Pakistan’s stock market. Echoing this sentiment, Muhammad Hamza Anwaar, Manager of Public Relations at Zahid Latif Khan Securities, pointed to the downward trend in the interest rates as a primary factor contributing to the shift of investments from fixed-income assets to the stock market. “The economy is on a growth trajectory, and with interest rates coming down, people are moving away from fixed income to the stock exchange,” Anwaar observed. He also highlighted the current government’s historical pro-business stance as a positive signal for investors. Additionally, Anwaar noted that Pakistan’s stock market, with a price-to-earnings ratio between 5.2 and 5.4, was considerably undervalued compared to the regional markets, presenting attractive opportunities for the investors.

He further recalled that in 2017, the PSX’s market capitalization reached $1 trillion, while the current 91,000-point index still reflected relatively low stock prices. Anwaar expressed confidence that as stock prices rise, market capitalization will follow, potentially propelling the index to new heights. “With a stable GDP, low interest rates, and inflation under control, we could see the PSX reaching 96,000 to 97,000 points,” he suggested. The performance of the PSX indicates positive economic indicators, policy reforms, and a stable macroeconomic environment. If these trends continue, Pakistan’s stock market is likely to reach new milestones, positioning itself as an attractive option for both local and foreign investors.

Credit: INP-WealthPk