Pakistan Market Overview 2023: Index Rises by 55%

By Newztodays Team

Pakistan Market Overview 2023 shows Pakistan’s stock market showcased remarkable performance.

The main KSE 100 Index witnessed a significant rise of 55% (24% when measured in US dollars), a growth that includes the dividends distributed in the same period.

Such an increase of 55% was last observed 13 years ago when the index surged by 60% in 2009.

The performance of the KSE-100 Index in 2023 was notable for its dichotomy, with a modest increase of 4% in the first half and an impressive surge of 51% in the latter half of the year.NBP Funds: Investors’ Guide to invest in Stocks

Factors contributing to this robust performance in the second half of 2023 included a favorable IMF Stand By Agreement, successful completion of the first IMF review, stability in the currency, and the announcement of national elections, all of which positively influenced investor confidence.

There was a notable uptick in market activity, with daily trading volumes (in ready/cash transactions) at the Pakistan Stock Exchange (PSX) climbing by 41% to 323 million shares, the highest since 2021.

Additionally, the daily average trading value in the cash market rose by 45% to Rs 10 billion, a peak not seen since 2021. In the futures market, both the volume and value of trades per day increased by 17% and 24%, reaching 110 million shares and Rs 4.5 billion, respectively.

According to Bloomberg’s data, the KSE-100 Index was ranked as the third-best performer in local returns for 2023. However, it didn’t make the top 10 when returns were calculated in US dollars.

Bloomberg noted that in the second half of 2023, PSX was the leading market globally, achieving gains of 51% in Pakistani Rupees and 54% in US dollars.

Compared to other investment vehicles, the KSE Index outshone in 2023, surpassing the 1-year US Dollar Naya Pakistan Certificate (up by 33%), US Dollar (up by 24%), Treasury Bills (up by 23%), and Gold (up by 21%). Real estate indices reported annual returns ranging between 6% and 29%.

2023 was a subdued year for initial public offerings (IPOs) in Pakistan, with only one IPO raising a modest Rs 435 million. This figure represents the smallest amount collected through an IPO in over a decade, falling short of the previous low of Rs 800 million recorded in 2013. Factors like macroeconomic instability, the looming risk of default, undervalued market prices, and political uncertainties were deterrents for equity investments throughout the year.

In a positive turn, foreign corporations became net purchasers in 2023, buying US$73 million worth of stocks. This marked a significant shift after three years of net selling and was the largest influx of foreign capital in eight years. Over the preceding three years (2020-2022), these corporations had sold shares totaling US$1.1 billion.

Domestic companies and individual investors also actively participated in the market, with companies acquiring stocks worth US$128 million and individuals purchasing US$27 million worth of shares.

However, local mutual funds and banks reduced their market holdings, with net sales of US$132 million and US$61 million, respectively, in 2023.