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Pakistan’s KSE-100 has seen a record year, but how far can the bull run?

  • Experts say upside still available, but dependent on several factors
Published November 23, 2023

It took over six years for Pakistan stock market’s benchmark KSE-100 index to hit a new peak. Now that it has, there seems to be no stopping it.

From its closing at 52,876.46 on May 24, 2017, the index first registered a record high on November 3, 2023, closing over 53,000.

It has since – in less than three weeks – added nearly another 11%, crossing new thresholds almost every session and still, market participants believe there is more upside available.

With the KSE-100 Index hitting record highs every day, avid investors are curious to see if there is further upside available. No one wants to enter the market when the peaks have already been hit

Major reasons behind bull run

The KSE-100 started near the 40,000 level in 2023. Six months in, it was still languishing around the same level.

The turning point was the International Monetary Fund (IMF) staff-level approval for a $3-billion Stand-By Arrangement at the end of June. Many saw it as an upgrade to what the then coalition-led government was hoping for. The market rejoiced. Later, the Executive Board’s nod was icing on the cake.

But then came another downturn, and this one was caused by the rupee’s rapid slide against the US dollar in August.

The euphoria over the IMF’s SBA was over, and investors were now looking at the rupee’s lower value as a further sign that inflation would rise, giving impetus to the interest-rate hike. But authorities in Pakistan initiated a massive crackdown that saw the rupee register a record appreciation run that extended well over a month till the mid of October.

Notice how the KSE-100 increased while the rupee also gained in value in tandem. This was no coincidence. It was the investors saying the rupee’s bad days are over.

The Election Commission of Pakistan (ECP) also announced during the latter half of September that general elections will be held in the last week of January 2024. However, it did not issue a specific date at the time. A date was later announced, which provided further impetus and clarity.

Then came the kicker – the State Bank of Pakistan (SBP) kept its monetary policy unchanged at the end of October. The market only needed this final push – from October 30 to date, the KSE-100 has added another 16% to its level. This was also no coincidence.

Stakeholders are still bullish. They cite a low price-to-earnings multiple, and PSX companies’ enhanced profitability this season. Days of distress seem to be over, according to them.

So how much upside is still available?

With the KSE-100 Index hitting record highs every day, avid investors are curious to see if there is further upside available. No one wants to enter the market when the peaks have already been hit. Its the perfect way to get ‘trapped’.

But experts Business Recorder reached out to had a different take on this.

“The market is continuing its positive momentum amid expectations of monetary easing, strong profitability, and certainty on the upcoming general election,” Tahir Abbas, Head of Research at Arif Habib Limited (AHL), told Business Recorder on Thursday, a statement that came when the KSE-100 was trading near the 59,000-point level.

“Despite the fact that the market is trading at an all-time high, the valuations are still attractive. The KSE-100 is currently trading at PE (price-to-earnings ratio) of 4.3x as compared to the last 5-year average of 6x.

“We expect the benchmark index to reach 80,000 by December 2024. It is expected to cross 60,000 by December 2023,” said a confident Abbas.

Murtaza Jafer, Head of Sales at Optimus Capital, expected the benchmark index to reach 61,000-62,000 by the end of December.

“However, the upcoming central bank’s Monetary Policy Committee (MPC) meeting would be key in this regard. If the MPC announces an interest rate cut, then the aforesaid level would be reached comfortably,” he told Business Recorder.

Sharing her analysis of the key indicators driving the current buying spree at PSX, Amreen Soorani, Head of Research at JS Global, said the actions taken by the government against illicit trade, and illegal currency operations have also boosted investor confidence.

“Adding to this is the successful first review of the IMF, as the market is expecting inflows by the end of this year,” she told Business Recorder.

“Issues due to which the market was trading at a deep discount are being addressed,” she added.

The analyst added that the corporate profitability has been strong, while dividend announcements have also been consistent, “and this has started to price in”.

However, Soorani was cautious in sharing optimism.

“The continuation of this trend would depend on how gradual the rupee depreciates from here onwards.

“Secondly, the result of the next IMF review would decide whether we move into a fresh programme or not. The timeliness of the general elections will also be a factor.”

Author Image

Ali Ahmed

The writer is a Senior Sub Editor at Business Recorder (Digital)

Bilal Memon

Bilal Memon is the Head of Digital Content at Business Recorder. His Twitter handle is @bilalahmadmemon


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Yousuf Nov 23, 2023 06:57pm
Market is going up without any substantial fundamentals support and I am seeing big correction in the near future. Common man should stay away from this dangerous game.
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Az_Iz Nov 23, 2023 09:02pm
Valuation is very good with a PE of 4.3x. Worldwide, it is more like 20x.
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Fazeel Siddiqui (Overseas Pakistani) Nov 24, 2023 01:42am
Almost all PSX experts are saying same words, perhaps line of big brother. Big guy should allow more illicit money and no surprise you may witness PSX hitting 70,000.
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Tariq Nov 24, 2023 03:56pm
After a very long time. The stock market get bullish. And I think it will keep going upward at least 2/3 years in a row. Even though novice traders or just because of this trend of bullish new comers who like to enter in stock market to earn profit only, they should be careful before taking any such step. Political stability is still in the pipeline that impacts a lot of any market. Keep Profiting.
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Shahid Nov 24, 2023 07:52pm
I think nobody is looking, why would stock go up? there is no fundamental reason or change. So this up is something fishy, basically some where different shares being chosen giving them bull! and they are going up and up. but they all will come down. Because there is no fundamental reason for up. But many people will loos huge money this dangerous game. We say valueation but how many company give you real dividend, this year been very bad in dividend, and still we have bull market so that does not make sense.
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Trthskr Nov 25, 2023 01:53pm
Economy is tanking and KSE-100 setting records....only happens sin the land of crooks and the compromised!
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mustafa Nov 25, 2023 11:29pm
after reading comments, one can see lack of basic knowledge in Pakistan 1. when any company makes 10 Pkr profit and value of share is 100pkr (@160pkr/dollar) what should be the price of share if same company shows profit of 24-25 PKR ( such increase in profits are due to PKR devaluation 2. short term correction can happen - but ultimately it will move toward 1 lac points in coming 2-3 years. 3. kindly read reports of companies - before Creating an opinion.
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dr.fahad Nov 25, 2023 11:33pm
Real market valuation as compare to gdp should be 70-150 % of gdp . Approximately current stock market capital value is 27 billion usd and gdp is 300-350 billion usd . So in long term it can increase 10 time
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