Pakistan Becomes Best performing market in 2H2023
Flag of Pakistan in front of a clear blue sky
30 December 2023
Pakistan Equities outshined in 2023. The benchmark KSE 100 Index provided a gain of 55% (24% in US$) in 2023. This gain is inclusive of dividends received during this period. This gain of 55% is seen after 13 years, following a 60% increase in the index in 2009. Generally speaking, KSE-100 Index is a tale of two halves, with the index up 4% in 1H2023 and 51% in 2H2023.
In 2H2023, better than expected IMF Stand By Agreement (SBA), followed by the successful completion of the first IMF review, a stable currency, and the announcement of elections, helped improve investor sentiments. This sudden recovery in prices has been accompanied with significant improvement in trading activity with volumes (ready/cash) per day at PSX up 41% to 323mn shares/day in 2023 which was highest since 2021.
Similarly, average traded value per day was up 45% to Rs10bn/day in cash market which was also highest since 2021. In futures market, total traded volume and value per day were also up by 17% and 24% to 110mn share/day and Rs4.5bn/day, respectively.
As per Bloomberg data, Pakistan’s KSE-100 Index was amongst 3rd best performing market in local return in 2023. However, in US$ terms, it did not rank among the top 10. In 2H2023, PSX was the best-performing market, as per Bloomberg, gaining 51% in PKR and 54% in US$. Moreover, KSE Index also outperformed other asset classes in 2023 including 1-year US$ Naya Pakistan Certificate (+33%), US Dollar (+24%), T-Bills (+23%), and Gold (+21%). Property indices posted returns in the range of 6-29% in 2023.
Furthermore, Pakistan market (PSX) saw just one IPO in 2023, with a meagre Rs435mn of funds raised. This is the lowest amount raised in a year in the past decade and half of the previous record low of Rs800mn seen in 2013. Macro-economic instability, coupled with the looming threat of default, cheap valuations and political uncertainty discouraged equity investment in 2023. Foreign corporate turned net buyers in 2023 with net buying of US$73mn after 3 Years and highest inflows after 8 Years.
