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84% returns! Pakistan stock market attracts global investors: ‘Don’t have to stretch…'
Pakistan's stock market has begun attracting global investors once again. Know why.
The world's top investors are once again turning their attention to Pakistan as the Asian nation's stock market delivers some of the best returns globally.
Asset managers, including BlackRock and Eaton Vance Corporation, are investing in Pakistan's $50 billion market that delivered massive 84% returns to investors in 2024. Attractive valuations and a stabilising economy have further made the country an interesting site to invest. Intermarket Securities has predicted a gain of about 40% for the main KSE-100 Index in 2025, as per Bloomberg.
“You don’t have to stretch your imagination to make an investment case for Pakistan,” said Steven Quattry, New York-based portfolio manager at Morgan Stanley Investment Management Inc. The rally has been supported by strong earnings growth, he said.
Pakistan's work in procuring bailout package from the International Monetary Fund (IMF) and a stabilising economy born out of the efforts of a stable government helped the stock market deliver such tremendous returns. The country's current account balance has also improved and its inflation has also eased.
Who invested how much?
As of December, Pakistan's shares had a 5% weight in BlackRock Frontiers Investment Trust, marking a return for the money manager for the first time since March 2022. Eaton Vance reentered the market in the June quarter last year.
Legal & General Investment Management Ltd. and Evli Fund Management Co. have also raised holdings, according to data compiled by Bloomberg.
The level of foreign investor interest at present is comparable to the peak years of 2014-2018, according to Mohammed Sohail, chief executive officer of Topline Securities Ltd.
Risks remain!
Still, risks remain. The political environment is fragile, with former Prime Minister Imran Khan wielding power to mobilize nationwide protests from behind bars — unrest that threatens to derail economic activity.
Economic challenges also persist. The nation fell 6% short of its six-month tax collection target — a key condition for its $7 billion IMF loan — raising concerns about its ability to win the next tranche of the funding.
A downgrade in the nation’s status to frontier market status by FTSE Russell that took effect in September hurt sentiment, prompting foreigners to turn net sellers in the last three months of 2024.
