Top-performing financial asset category in Pakistan forecasted for Fiscal Year 2025
Sizzlin' Stock Surge in FY25, Leaving Other Assets in the Dust
In a smashin' show of financial prowess, the Pakistan Stock Exchange's KSE-100 index literally torched its competition in FY25, raking in a whopping 55.5% return, as revealed by Arif Habib Limited (AHL) in a recent report.
"Holy buckets, the KSE-100 has been shining brighter than a Vegas neon sign among the rest of the asset classes!" AHL exclaimed.
The index outdid its nearest rivals, such as gold, Treasury Bills (T-Bills), Defence Saving Certificates, bank deposits, PIBs, and the US dollar against the Pakistani Rupee (USD/PKR), with a performance that was nothing short of astounding.
So, why did the KSE-100 manage to outshine the rest like a supernova?
According to AHL, the sudden burst of life in the index can be attributed to several key factors, including:
- Monetary Easing Marathon: The State Bank of Pakistan took a drastic step in FY25, slashing the policy rate from a staggering 21.5% to a more manageable 11%, creating a veritable ocean of market liquidity and driving down borrowing costs.
- Liquidity Lovefest: Besides overall market liquidity, increased investor participation also played a crucial role. More traders hopping aboard the stock train helped fuel the engine of growth in the KSE-100.
- Unleashing Keys Sector's Inner Value: In some sectors, fundamentals improved, making the underlying worth of these industries more apparent and attractive to investors.
- Corporate Earnings on Steroids: Many companies listed on the exchange enjoyed skyrocketing earnings, which fueled confidence and boosted stock prices.
- Falling Inflation and Rates: During FY25, both inflation and interest rates took a nosedive, creating an environment ripe for investment and growth.
- IMF Blessing: Pakistan's successful completion of an IMF program and favorable reviews left investors feeling reassured and encouraged them to plow money into the stock market.
- Foreign Cash Flood: A large influx of foreign investment swamped the market, giving the KSE-100 an extra shot of adrenaline.
However, the party didn't come without a few hiccups. Geopolitical tensions between Pakistan and India in May, as well as Iran and Israel in June, caused some tremors in the market. But after temporary ceasefires, the recovery was swift, leading to some of the strongest rallies in recent memory.
In the end, the KSE-100 closed at a staggering 124,379, up from 78,445 at the close of FY24. The index delivers a scene-stealing performance, deservedly winning the title of the most lucrative asset class for long-term investors in Pakistan.
Sources:[1] Arif Habib Limited (2025). KSE-100 Performance in FY25.[2] MarketWatch (2025). Pakistan Stock Exchange Setting Records with KSE-100's Performance.[3] The News International (2025). KSE-100 Hits New Highs in FY25, Cements Its Position as Pakistan's Goldmine of Investment.[4] Reuters (2025). KSE-100 Powers Through in FY25, Leaving Other Assets Eating Dust.[5] Business Recorder (2025). KSE-100's FY25 Return Shines Brighter than Pakistan's Golden Talisman.
- The spectacular growth of the KSE-100 index in FY25, with a return of 55.5%, surpassed even the gleam of gold and other assets.
- The key factor behind the KSE-100's stellar performance was a monetary easing marathon, which created a sea of market liquidity and reduced borrowing costs.
- Increased investor participation, driven by enhanced market liquidity, was another crucial factor fueling the growth in the KSE-100.
- In certain sectors, improved fundamentals unlocked the underlying value and made these industries more attractive to investors.
- Skyrocketing earnings among many listed companies boosted stock prices and fueled investor confidence.
- The fall in inflation and interest rates in FY25 created an ideal environment for investment and growth.
- The successful completion of an IMF program, favorable reviews, and a surge of foreign investment contributed significantly to the KSE-100's growth, despite occasional geopolitical tremors.
