PSX outperforms global markets, attracts international investors: Bloomberg

The Pakistan Stock Exchange (PSX) has been named the world’s best-performing stock market in 2024 owing to improved macroeconomic conditions, as reported by Bloomberg.

The achievement is driven by a surge in foreign investment and favourable economic conditions that have boosted investor confidence. The PSX’s KSE-100 Index reached a record high, closing at 81,459 points after a 1.1% increase, and hitting 81,865 points during intraday trading.

This performance reflects the highest level of foreign investment in over a decade, propelling the market to a 30% growth this year, and making it the top performer globally. The foreign investors acquired $87 million worth of Pakistani shares in 2024, marking the highest foreign investment since 2014.

This influx of foreign capital, coupled with positive domestic economic developments, has been pivotal in driving the stock market’s growth. According to Bloomberg, the PSX’s strong performance is largely due to improved economic fundamentals and increased foreign participation.

Other key factors such as improvements in Pakistan’s current account balance and the central bank’s decision to cut interest rates have played significant roles in market growth. With inflation under control, the central bank has been able to make these rate cuts, further encouraging investment.

In July, the Financial Times Stock Exchange (FTSE) Russell reclassified Pakistan from a secondary emerging market to a frontier market, effective September 23. This reclassification, while posing some challenges, underscores Pakistan’s growing appeal in the global investment sphere. The change is expected to attract further international attention, with investors drawn to opportunities in sectors like fertilisers and energy, which hold significant growth potential.

Vanguard Group Inc., a major global investment firm, currently holds $160 million in Pakistani stocks and is expected to increase its investment as the PSX outlook remains positive. Business leader Aqeel Karim Dhedhi expressed optimism about foreign investment in Pakistan, noting that the country’s stock market is relatively inexpensive compared to global peers.

He said that anticipated US Federal Reserve rate cuts could further boost foreign inflows, positioning Pakistan as an attractive option for investors seeking growth in emerging markets. Dhedhi also highlighted Pakistan’s ongoing structural reforms and improved business environment as key factors enhancing its investment appeal.

Despite challenges like external debt and fiscal deficits, the outlook for the PSX remains positive. Rising foreign investment and strengthening economic fundamentals suggest continued strong performance. The market’s recent rally, with the KSE-100 Index reaching 82,157.31 points, reflects robust investor confidence and a positive economic trajectory.