The Pakistan Stock Exchange (PSX) continued its upward trend on Monday, with the benchmark KSE-100 Index surging by 2,105.29 points, or 1.89%, reaching an intraday high of 113,456.46. This strong performance set a positive tone for the week, driven by renewed investor confidence and a favorable economic backdrop.
Several factors contributed to the market’s growth, including optimism about Pakistan’s economic recovery, reduced geopolitical tensions, and supportive monetary policies. Recent clarity on the taxation framework for the banking sector has also alleviated investor concerns, particularly regarding tax procedures.
The federal government’s recent approval of an income tax ordinance, which revises the calculation of bank profits and increases the tax rate on the banking sector from 39% to 44%, is expected to generate an additional Rs70-75 billion in revenue by December. This move is seen as a step towards stabilizing the fiscal situation, boosting investor sentiment.
Despite foreign investor outflows of $6.8 million—primarily from the banking sector—the market’s growth was sustained by strong local buying from individual investors and domestic banks/DFIs. This local support offset the selling pressure and contributed to the market’s bullish performance.
Further backing came from the government’s successful auction of Treasury Bills (T-bills), which raised Rs913 billion, although slightly short of the Rs1,200 billion target. Nevertheless, the auction highlighted sustained demand for government securities.
Although foreign exchange reserves dipped by $228 million to $11.9 billion due to external debt repayments, Pakistan’s economic fundamentals remain strong. November saw a 16.91% year-on-year decline in imports, while exports rose by 17.56%, leading to a current account surplus of $729 million—the highest in a decade. Foreign direct investment (FDI) also saw a notable 31% year-on-year increase during the first five months of FY2024-25.
With a 78% return on the KSE-100 Index, making it the second-best performing stock market globally, analysts remain optimistic about the PSX’s performance in the remainder of the year. They expect the market to maintain its positive momentum into 2025, supported by continued political stability, liquidity, and pro-growth economic policies.
