Moaaz Manzoor

Experts attribute the Pakistan Stock Exchange’s (PSX) record-breaking spree – with the index surging past 100,000 points – to a combination of favorable macroeconomic factors and strategic investment trends.

Talking to WealthPK, Mahmood Ali Shah Bukhari, CEO of Ktrade Securities Limited, highlighted the sustained rally, saying that the current market valuations remain significantly undervalued. “We are at a multiple of about 4.8 times at the moment. Even if this was to go to 6.5, there is still a lot of room. With the interest rates coming down, the market will continue to perform. These undervalued valuations have caught the attention of foreign investors, who are seizing the opportunity, driving further momentum in the market.” According to Bukhari, this trend of foreign participation was likely to persist, further bolstering the market sentiment and performance.

Similarly, Syed Kashan Kazmi, Managing Director of Integrated Equities Limited, echoed this optimism, pointing to the pivotal role of the declining interest rates in redirecting funds from the fixed-income assets into equities. This shift has sparked a rally in mutual funds, amplifying the overall market activity. The Pakistani rupee’s stability has also played a significant role, with the State Bank of Pakistan (SBP) purchasing $1.3 billion during June and July to maintain currency stability. This strategic move has strengthened the market sentiment, creating a conducive environment for sustained equity investment.

Kazmi also highlighted the importance of political and macroeconomic stability, which have been instrumental in delivering a staggering surge in the PSX Index over the past 18 months. These conditions, coupled with the declining fixed-income yields, have enhanced the appeal of equity investments, marking a notable shift in investor preferences. The PSX’s remarkable rise is not only a reflection of domestic economic factors but also a sign of its increasing integration into the global investment landscape. Foreign investors have been particularly drawn to the market’s attractive valuations and improving fundamentals. At the same time, as Pakistan’s economic outlook stabilizes, the PSX’s performance serves as a testament to the country’s ability to adapt and thrive.

The convergence of favorable monetary policies, foreign investor interest, and stable macroeconomic indicators sets a strong foundation for sustained growth in the equity market. This milestone of surging past 100,000 points not only showcases the resilience of Pakistan’s financial markets but also signals a broader trend of investor optimism driven by a tangible economic progress. While challenges remain, the PSX’s unprecedented performance highlights its role as a barometer of economic recovery and its potential as a key driver of Pakistan’s financial growth in the years ahead.

Credit: INP-WealthPk