Pakistan Stock Exchange (PSX), after bottoming out at a three-year low in 2023, ended the year as the best performing bourse around the globe in the backdrop of a $3 billion International Monetary Fund (IMF) loan programme, disappearance of chances of debt default and successful completion of first IMF review.
The benchmark KSE-100 index registered a 14-year high growth at 55%, mostly in the second half of the year, and closed at 62,451 points on Friday (December 29).
Earlier, the market had dived to a three-year low at 38,136 points in January amid political instability and growing economic hardships.
The growth came when foreign investors staged a comeback after a hiatus of three years with the return of stability to the rupee-dollar exchange rate. It boosted the confidence of almost all investors.
The year 2023 remained an eventful, record-making and breaking period during which the bourse skyrocketed to a historic high at 67,094 points in December. Its rally was driven by optimism over the upcoming reduction in the central bank’s key policy rate from a record high of 22% and significantly low share prices as compared to their peaks.
In the last week of December, the market also saw the largest drop of 2,534 points (or 4.11%) in a single day over panic selling by those investors who had purchased stocks with expensive borrowing.
The market’s plunge was described as a correction following over 65% surge in the KSE-100 index over the past six months to the record high of 67,094 points. In June, the index was standing at 40,000.
The index hit a 15-year high for a single day by gaining 2,446 points (nearly 6%) on July 3, which was the first working day for the bourse after Pakistan won a $3 billion IMF loan programme in late June.
Citing Bloomberg data, Topline Research reported that the PSX emerged as the best performing market in the second half of 2023 with 51% gains in rupee terms and 54% return in US dollars.
For the full year 2023, the benchmark KSE-100 index got the title of third best performing market in local currency. Arif Habib Limited (AHL) reported that Pakistan’s bourse ranked 14th around the world in 2023 in terms of returns in US dollars.
Topline Research said “in the second half of 2023, a better-than-expected IMF standby arrangement (SBA), followed by the successful completion of first IMF review, a stable currency and the announcement of elections helped improve investor sentiment.”
Foreign corporate investors turned net buyers in 2023 after a gap of three years with net buying of $73 million – the “highest after eight years”. In the past three years (2020-22), foreign investors had sold shares worth $1.1 billion.
The sudden recovery at the PSX was supplemented by a significant improvement in trading activity as average volumes (ready/cash) went up 41% to 323 million shares per day, the highest since 2021.
Similarly, average traded value soared 45% to Rs10 billion per day in the cash market, which was also the highest since 2021. In futures, total traded volumes and value per day rose 17% and 24% to 110 million shares and Rs4.5 billion, respectively. AHL Research said investor confidence rebounded in the second half of 2023 following the IMF SBA in June, leading to a surge in investment flows to the market.
