Pakistan Stock Exchange’s KSE-100 Index Records Impressive 55% Gain in 2023
In a significant turn of events, the Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index delivered a remarkable gain of 55 percent in 2023, according to a comprehensive report by Topline Securities. This substantial increase, inclusive of dividends, marks the highest surge in the index in over a decade, following a 60 percent rise in 2009. In US Dollar terms, the index experienced a notable 24 percent increase throughout the year.
The report highlights a distinctive trend in the KSE-100 Index’s performance, dividing the year into two halves. The index recorded a 4 percent gain in the first half of 2023, followed by a substantial 51 percent surge in the second half. The latter period witnessed a boost in investor sentiments, attributed to factors such as a better-than-expected IMF Stand-By Agreement (SBA), the successful completion of the first IMF review, a stable currency, and the announcement of upcoming elections.
This unexpected recovery in prices was accompanied by a significant improvement in trading activity, with daily volumes at the PSX increasing by 41 percent to 323 million shares per day in 2023, marking the highest since 2021. Similarly, the average traded value per day in the cash market saw a 45 percent increase to Rs. 10 billion, also the highest since 2021. The futures market reported a 17 percent increase in total traded volume per day and a 24 percent increase in total traded value per day.
According to Bloomberg data, the KSE-100 Index was among the top three best-performing markets in terms of local return in 2023. However, in US Dollar terms, it did not secure a position in the top 10. In the second half of 2023, PSX emerged as the best-performing market, gaining 51 percent in PKR and an impressive 54 percent in US Dollar terms.
The KSE Index outshone other asset classes in 2023, surpassing returns from 1-year US$ Naya Pakistan Certificate (+33 percent), US Dollar (+24 percent), T-Bills (+23 percent), and Gold (+21 percent). Property indices posted returns in the range of 6-29 percent during the same period.
Despite these positive trends, the report noted that the Pakistan market (PSX) witnessed only one Initial Public Offering (IPO) in 2023, raising a modest Rs. 435 million. This amount represents the lowest funds raised in a year in the past decade and is half of the previous record low seen in 2013. The report attributes this decline to macroeconomic instability, the looming threat of default, cheap valuations, and political uncertainty, which collectively discouraged equity investment in 2023.
In a noteworthy shift, foreign corporates turned net buyers in 2023, recording a net buying of $73 million after three years and the highest inflows in eight years. Over the last three years (2020-2022), foreign corporations have sold shares worth $1.1 billion. Companies and individuals also emerged as net buyers in 2023, with companies purchasing shares worth $128 million and individuals contributing $27 million. However, local mutual funds and banks trimmed their positions in 2023, with net selling of $132 million and $61 million, respectively.
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