Stocks emerge as best-performing asset class in Pakistan for FY25

Stocks emerged as the top-performing asset class in FY25 with a return exceeding 55%, led by aggressive monetary easing, improved market liquidity, and the unlocking of fundamental value across key sectors, said Arif Habib Limited (AHL).

“The KSE-100 exhibits the strongest performance across all asset classes, boasting a FY25 return of 55.58%, significantly outperforming gold (47.56%), T-Bills (12.68%), Defence Saving Certificates (12.61%), bank deposits (12.60%), PIBs (11.97%), and USD/PKR (1.91%),” AHL said, in its report Friday.

As per the brokerage house, the KSE-100’s (benchmark index of the Pakistan Stock Exchange) returns consistently outshine those of other major asset categories.

“Even the historical gains from gold and T-Bills in recent times have been unable to match the impressive surge of the equity market.”

It added that the KSE-100’s CAGR, or Compound Annual Growth Rate, is higher than all other asset classes in every long-term benchmark, from a 5-year holding period to a 20-year holding period.

“This performance suggests that the KSE-100, particularly the equity market, is the most lucrative asset class for investors with a long-term horizon in Pakistan,” it added.

KSE-100 in FY25

During the outgoing fiscal, the KSE-100 Index delivered a stellar performance, surging by 58.6% in PKR terms and an impressive 55.5% in USD terms to close at 124,379, up from 78,445 at the end of FY24.

“This remarkable rally was driven by aggressive monetary easing, improved market liquidity, and the unlocking of fundamental value across key sectors,” said AHL.

The brokerage house shared that FY25 also witnessed record market participation, with the highest-ever trading volumes and the highest traded value since FY21.

During FY25, the State Bank of Pakistan (SBP) slashed the policy rate from 21.5% to 11%, marking one of the most aggressive easing cycles in the country’s history. Moreover, Fitch Ratings upgraded Pakistan’s credit rating from CCC+ to B- following successful staff-level agreements with the IMF on the $7 billion Extended Fund Facility and the $1.3 billion Resilience and Sustainability Facility.

Meanwhile, the PKR depreciated by a modest 1.9% against the USD FY25.

However, despite the gains, geopolitical tensions jolted the market during the year, with sharp declines triggered by escalations between Pakistan and India in May’25, and Iran and Israel in Jun’25.

“However, subsequent ceasefires fueled some of the strongest market rallies in recent history,” it said.