Pakistani Stock Market is the World's Best Performing Market in 2024

by Riaz Haq

Jul 4

Pakistan's KSE-100 shares index topped 80,000 points on Wednesday as stocks climbed more than 600 points, making it the world's best performing stock market. The benchmark KSE-100 index has posted an annual return of 89% during FY24 (July 2023-June 2024) in PKR terms while in US dollar terms, the return was 94%, as the Pakistani rupee appreciated against the US dollar, according to Pakistani media reports.  This outstanding market performance is generally being seen as a consequence of a series of unpopular decisions  by the military-backed government of Prime Minister Shahbaz Sharif to carry out economic reforms to win the IMF support. 

Pakistani Stock Market Outperforms Asian Peers. Source: Bloomberg

Specifically, some analysts attribute the record increase in Pakistani share prices to multiple factors, ranging from the government's investor-friendly budget to the expectation of closing a longer term IMF deal. Others believe the relatively low price-earnings (P/E) multiples of Pakistani stocks make them attractive to investors. 

Awais Ashraf, director of research at AKD securities, attributed the stocks upward momentum to “expected entry into the larger IMF program and expected monetary easing boosting investor confidence in equities”, according to Dawn newspaper. 

“The majority increase in return is attributed to re-rating of Price to Earning (PE) from 2.2-2.4x in June 30, 2023 to 3.94x in Jun 28, 2024,” said a Pakistani investment firm Topline Securities in its report. It attributed the PE multiple re-rating to “improving economic indicators, i.e. increase in exports and remittances by 11% and 9%, respectively in 11MFY24, decline in inflation from peak of 38.0% in May-23 to 11.8% in May 2024.”

Foreign portfolio investors are coming back to Pakistan’s debt and equity markets after a prolonged absence, marking a significant shift in market sentiment, according to a report in The Express Tribune newspaper. The short-term external investment has surged by a remarkable 84%, catapulting to a 30-month high, now standing at Rs 501.30 billion (US$ 1.8 billion) .

There is a distinct difference in how the new budget, compliant with the IMF requirements, has been received by the ordinary public compared to the investor class. Higher taxes on consumption in the new budget have angered most consumers but the prospects of  lower fiscal deficits and significant macro-economic improvements are generally being welcomed by investors. The government, backed by the Pakistani military, sees the need to improve the macro-economic indicators as essential to improving the long-term health of the national economy. 

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  • Riaz Haq

    ‘Pakistan’s coalition govt to last just 18 months’ amid political turmoil: Fitch report

    https://pakobserver.net/pakistans-coalition-govt-to-last-just-18-mo...

    American credit rating agency Fitch shared a worrisome report about Pakistan’s current political instability that could hinder economic recovery.

    In its latest Country Risk Report, Fitch Business Monitor International highlighted the critical condition of Pakistan’s economic recovery, pointing out that political turmoil will affect economic activities.

    The report pointed out unstable political situation, with Pakistan Tehreek-e-Insaaf (PTI) founding chairman and former Prime Minister Imran Khan expected to remain behind bars despite legal victories.

    It said the PML-N led coalition government will remain in power for next 18 months, with no immediate plans for new elections. Fitch also mentioned a potential scenario where a technocratic administration could take over if the government changes.

    This implies that Pakistan will continue to implement IMF-mandated reforms, enabling the economy to grow by 3.2% in 2024/25. The report projects that the policy rate could reach 16 percent this fiscal year and 14 percent next year, while the exchange rate has stabilized beyond expectations.

    USD is expected to reach Rs 290 by the end of this year and Rs 310 next year, the report said. Achieving budget targets under the IMF program is considered challenging, although the fiscal deficit is expected to decrease from 7.4 percent to 6.7 percent, it added.

    Fitch also warned that another flood or natural disaster could significantly threaten the already fragile economy.

    Jul 17

  • Riaz Haq

    Pakistan’s current account posts deficit of $681mn in FY24 - Markets - Business Recorder

    https://www.brecorder.com/news/40313476

    Pakistan’s current account posted a deficit of $681 million in FY2023-2024, massively lower by 79% than the deficit of $3.275 billion in the previous fiscal year, revealed data released by the State Bank of Pakistan (SBP) on Friday.

    The CAD amounts to 0.2% of GDP, which is the lowest in the last 13 years, said brokerage house Arif Habib Limited (AHL).

    “This significant decline was driven by a 6% reduction in the trade deficit and an 11% increase in remittances,” it added.

    In FY24, the country’s total export of goods and services amounted to $38.9 billion. Imports clocked in at $63.3 billion during the period, according to SBP data.

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    Pakistan's IT exports up by 24% to $3.2bn in FY24 - Profit by Pakistan Today

    https://profit.pakistantoday.com.pk/2024/07/19/pakistans-it-exports...

    Pakistan's IT exports surge by 24% to reach US$3.2 billion in FY24. In a significant economic development, Pakistan's Information Technology (IT) exports have soared to US$3.2 billion in the fiscal year 2024, marking a robust 24% year-on-year increase from the previous fiscal's US$2.59 billion.

    The latest data, released by the State Bank of Pakistan, underscores the sector’s resilience and growth amidst global economic challenges.

    For June 2024 alone, Pakistan recorded IT exports worth $298 million, up by 33% compared to the same period last year. Despite a month-on-month decline of 10%, June’s exports surpassed the twelve-month average of $262 million, highlighting sustained momentum in the sector.


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    FY24 exports soar 10.54pc to $30.645bn YoY - Business & Finance - Business Recorder

    https://www.brecorder.com/news/40310979

    ISLAMABAD: The country’s exports increased by 10.54 percent ($2.921 billion) to $30.645 billion during the fiscal year 2023-24 compared to $27.724 billion in the corresponding period of 2022-23, says the Pakistan Bureau of Statistics (PBS).

    The monthly trade data released by the Bureau noted that Pakistan’s trade deficit narrowed down by 12.32 per cent in the fiscal year 2023-24 as it stood at $24.089 billion compared to $27.474 billion during the fiscal year 2022-23.

    Imports declined by 0.84 per cent to $54.734 billion during the fiscal year 2023-24 as compared with $55.198 billion in the fiscal year 2022-23.

    The data further noted that the trade deficit widened by 30.39 per cent on a year-on-year basis and stood at $2.390 billion in June 2024 compared to $1.833 billion during the same month of 2023.

    The imports increased by 17.43 per cent on a YoY basis and remained $4.919 billion in June 2024 compared to $4.189 billion in June 2023. The exports increased by 7.34 per cent on a YoY basis and remained $2.529 billion in June 2024 compared to $2.356 billion in June 2023.

    On a MoM basis, the trade deficit widened by 15.13 per cent to $2.390 billion in June 2024, as compared to $2.076 billion in May 2024. Exports recorded a 10.92 per cent negative growth to $2.529 billion in June 2024 when compared with $2.839 billion in May 2024.

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    Remittances in FY24 - BR Research - Business Recorder

    https://www.brecorder.com/news/40313433

    Remittances to Pakistan grew by 10.7 percent year-on-year in FY24 to $30.3 billion. The annual tally is the second highest in the country’s history at $30.3 billion in FY24 after $31.2 billion in FY22. Remittances during June 24, the last month of the fiscal year stood at $3.16 billion, up by 44 percent on a year-on-year basis, but down by 3 percent on a month-on-month basis.

    Jul 20

  • Riaz Haq

    Pakistan's domestic exports rose by 8.90% in FY2023-24

    https://www.samaa.tv/2087319468-pakistan-s-domestic-exports-rose-by...

    In the fiscal year 2023-24, Pakistan's domestic exports saw a notable increase of 8.90%, reflecting a positive trend in the country's trade performance.

    The total exports of goods and services surged by $3.16 billion compared to the previous fiscal year, bringing the total export volume to $38.48 billion.

    Breaking down the figures, the export of goods reached $30.68 billion, while services exports amounted to $7.80 billion. The export of goods experienced an annual increase of $2.95 billion, whereas the services sector saw a more modest rise of $210 million.

    The textile sector remained a significant contributor, with exports totalling $16.65 billion. The agro and food sector also performed well, recording exports of $7.37 billion. Additionally, manufacturing and engineering exports crossed the $4 billion mark, showcasing the sector's growth and potential.

    According to the Ministry of Commerce, other sectors contributed $2.22 billion to the total export volume, highlighting the diverse range of products and services that Pakistan offers to the global market.


    Meanwhile, in the first month of the current financial year, Pakistan witnessed a sharp increase in car imports, while smartphone imports took a downturn, according to the latest report from the Pakistan Bureau of Statistics (PBS).

    Car imports more than doubled in July 2024, with vehicles worth $23.29 million ordered during the month. The value of these imported cars in local currency amounted to approximately Rs6.45 billion.


    In addition to this surge in car imports, car assembly operations also saw a rise, with parts worth $34.2 million being imported in July 2024. The value of these parts in local currency was over Rs9.5 billion, indicating robust demand for both fully built units (CBUs) and completely knocked down (CKD) car kits.

    This trend is notable as Pakistan continues to see increasing demand for automobiles, even amidst economic challenges and inflationary pressures. Industry analysts suggest that a growing middle class and increased consumer financing options may be driving the growth in car imports.

    However, the same cannot be said for smartphone imports. In contrast to the car sector, smartphone imports saw a decline of 5.3% in July 2024 compared to the same period last year. Smartphones worth $64.5 million were imported last month, a sharp contrast to July 2023 when mobile phone imports amounted to $68.1 million.

    Aug 20