The Pakistan Stock Exchange (PSX) witnessed a remarkable surge in its benchmark KSE-100 Index, posting a substantial gain of 55% in 2023. This impressive performance, as reported by Topline Securities, is a significant milestone for the country’s stock market.
A Decade-Defying Gain
The gain of 55% achieved by the KSE-100 Index in 2023 is exceptional. It is the most substantial increase in the index since 2009. This year’s impressive performance underscores the resilience and potential of Pakistan’s stock market.
Two Halves of Success
The 2023 journey of the KSE-100 Index can be divided into two halves. In the first half of the year (1H2023), the index registered a modest 4% increase. However, the second half (2H2023) witnessed a remarkable surge of 51%.
This dramatic upswing can be attributed to a series of positive developments.
Driving Factors Behind the Surge
Several key factors played pivotal roles in driving the surge in stock prices during the latter part of 2023. These include:
IMF Stand-By Agreement (SBA) and Successful Review: The better-than-expected performance related to the IMF Stand-By Agreement and the successful completion of the first IMF review injected confidence into the market.
Stable Currency: A stable national currency contributed to a favorable investment climate, bolstering investor sentiments.
Announcement of Elections: The announcement of upcoming elections provided clarity and stability, further enhancing investor confidence.
Record-Breaking Trading Activity:
The surge in stock prices was accompanied by a significant increase in trading activity on the PSX. Daily trading volumes (ready/cash) surged by a remarkable 41%, reaching 323 million shares/day, the highest since 2021.
Similarly, the average daily traded value increased by 45% to Rs. 10 billion in the cash market, which is also the highest since 2021.
Outperforming Other Asset Classes:
The KSE-100 Index’s outstanding performance in 2023 outshone various other asset classes, including the 1-year US$ Naya Pakistan Certificate (+33%), US Dollar (+24%), T-Bills (+23%), and Gold (+21%).
The Pakistan Stock Exchange’s extraordinary 55% gain in 2023 showcases the market’s potential and resilience. A combination of favorable factors, including political stability, strong currency, and successful IMF agreements, contributed to this remarkable performance.
As Pakistan’s stock market continues to evolve, it presents exciting opportunities for investors and underscores its economic potential.