Brokers say Pakistani investors have reaped 80% gains as stock market soars to historic levels
KARACHI: Pakistan’s stock market is trading at historic levels and its strong performance has benefited retail investors, who have earned returns of around 80% of their invested amount, investors and brokers said on Wednesday. said.
Since Pakistan secured a $3 billion short-term bailout program from the International Monetary Fund (IMF), the country’s stock market has experienced an unprecedented surge, setting new records at an alarming pace since June last year.
Within a year, the benchmark KSE 100 index has surged more than 85%, recording its fastest recovery in the past two decades, and last week it breached the 75,000 point mark for the first time ever.
The historic performance of the country’s stock exchange has been a boon for those trading in the market, especially retail investors, according to stock analysts and brokers.
“They are [the small investors] “They are very happy,” Shahid Ali Habib, CEO of Karachi-based brokerage firm Arif Habib Limited, told Arab News. “If you ask any retail investor today, I’m sure they’re happy because the market has given them 78 to 79 percent returns over the last nine to 10 months.”
Pakistan was brought back from the brink of defaulting on its sovereign debt last June, but the IMF loan provided the country with a new lifeline and boosted its stock market.
Habib said many retail and retail investors who had placed their money in bonds have not benefited from recent market performance, earning returns of only 20-22%.
Despite showing a 78-79% performance, the stock market remains attractive in terms of price-to-earnings ratio and forward price as companies’ profitability has improved significantly.
“In 2019, the total profit of all listed companies was around Rs 600-700 billion; now it is Rs 1.4 trillion,” he continued. “Therefore, corporate profitability has grown significantly, which is why the price-to-earnings ratio has fallen.”
Mohammad Tariq, a broker and investor, agreed that the current market performance has satisfied investors, but noted that not all stocks had performed well.
“Small investors are reasonably happy, but not all the stocks in the 75,000 index have moved,” he said.
Tariq hoped that stocks that have not performed well in the past will perform better in the coming days, benefiting everyone.
“Some scrips are still stagnant but in the coming days, they too will perform well because as the saying goes, when it rains, it falls everywhere,” he added.
Investor Abdul Rauf said those who were doing instant delivery trades in stocks were highly profitable and even recouped their losses.
“Big and small investors who traded instant delivery stocks in 10-15 days made very good returns, enough to cover their previous losses,” Rauf told Arab News.
However, given the historic high levels, Abdul Rauf advised other investors to remain cautious due to the high volatility associated with the upcoming fiscal budget.
“From June onwards, we need to keep our capital flexible when the results become clear. [of budget] He added, “We should be a little cautious because we have crossed the 75,000 level for the first time in Pakistan’s history.”
Pakistani analysts said the continued performance of the stock market would depend on economic improvements, including easing of inflationary pressures, as well as the outcome of talks between Pakistan and the IMF.
“The active movement in Pakistan’s stock market reflects growing enthusiasm and optimism among investors,” Topline Securities said in a report last week. “The index could reach 87,000 by December 2024 and 106,000 by June 2025.”
Amid active trading at high levels, analysts have advised small investors to take a long-term investment perspective to make decent returns in equity investments rather than other asset classes.
Habib said: “I think for small to mid-sized investors, if you take a one- to two-year horizon when investing in the stock market, you can definitely make decent returns compared to other asset classes.” , and if investors take a long-term view of the situation, they could potentially earn an annualized return of 25-30%.
