PSX in FY25: From Oof to Boom

July 02, 2025 (MLN): The Pakistan stock market delivered yet another stellar performance in FY25, extending last year’s extraordinary rally, though at a slightly tempered pace.

The KSE-100 Index surged by 60.1% during the fiscal year ended June 2025 to close at 125,627.31, marking its second consecutive year of robust double-digit returns and reinforcing investor confidence in the market’s long-term trajectory.

This impressive advance followed FY24’s exceptional 89.2% gain, the highest yearly return since FY03, when the benchmark index added nearly 37,000 points to close at 78,444.9.

In FY25, the momentum continued as optimism over economic stabilisation, a supportive monetary policy environment, and an attractive corporate earnings outlook kept equities buoyant.

Key drivers included the central bank’s sustained monetary easing, improved external account metrics, and Pakistan’s continued engagement with multilateral lenders, which collectively bolstered macroeconomic sentiment.

However, the trading floor faced significant turbulence due to Trump’s 90-day tariffs, escalating tensions between Pakistan and India in May, and the conflict between Iran and Israel in June.

Following the India-Pakistan tensions, the KSE-100 Index saw its steepest single-day decline of the year, plunging 5.89% on May 9, 2025. Just days later, after a ceasefire was announced, the market staged a dramatic rebound, surging 9.45% on May 12, 2025, marking one of the strongest single-day rallies in recent history.

On the economic front, the State Bank of Pakistan (SBP) led from the front, executing one of the most aggressive easing cycles in the country’s history by slashing the policy rate from 21.5% to 11%.

No doubt, this decisive shift laid the foundation for a pickup in economic activity and investor sentiment.

Adding to the positive backdrop, Fitch Ratings upgraded Pakistan’s sovereign credit rating to B- from CCC+.

Furthermore, the successful staff-level agreements with the IMF for a $7bn Extended Fund Facility and a $1.3bn Resilience and Sustainability Facility also paved the way for investors’ sentiments. These developments provided much-needed external confidence at a time when the country was navigating a complex macro environment.

Pakistan’s standing in global equity markets also received a notable lift as MSCI added a total of five Pakistani companies to its Frontier Market Index during its latest semi-annual review.

The broader strengthened, with GDP growing by 2.68% and the size of the economy reaching an all-time high of $411bn. Per capita income also rose to $1,824, offering a modest but meaningful uplift to household prosperity.

The external account showcased an even sharper turnaround. Pakistan posted a current account surplus of $1.8bn during the first 11 months of FY25, a major shift from a deficit of $1.57bn in the same period last year.

The local unit held relatively stable, depreciating by just 1.95% over the year, while inflation cooled dramatically; average annual CPI inflation dropped to 4.49% during FY25 from a searing 23.41% a year earlier.

Despite this encouraging macro landscape, the local bourse faced bouts of turbulence triggered by geopolitical tensions. Escalations between Pakistan and India in May, and between Iran and Israel in June, sent shockwaves across regional equities.

However, swift ceasefires restored calm and powered some of the strongest rallies in recent memory at the PSX.

Not to forget, this strong market performance also attracted new equity offerings. On the IPO front, the trading floor saw three successful listings. This included BF Biosciences in the pharmaceuticals sector, Zarea Ltd. in technology, and Barkat Frisian Agro in food and personal care.

Top Index Movers

During the month, Commercial Banks, Fertilizer, Oil & Gas Exploration Companies and Cement added 15,159.96, 9,752.72, 6,868.52, and 5,621.79 points, respectively.

On the flip side, Automobile Parts & Accessories, Synthetic & Rayon, and Engineering lost -90.37, -29.56, and -26.16 from the index, respectively.

Among individual stocks, FFC, UBL, MARI, LUCK, OGDC and MEBL gained 6,305.59, 5,305.84, 2,648.40, 2,536.73, 2,082.94, and 1,796.06 points, respectively.

On the other hand, HUBC, MEHT, and EPCL dented the index by -347.40, -180.71, and -98.09 points.

FIPI/LIPI

Foreign investors remained as net sellers, offloading the equities worth $304.37m.

Among them, Foreign Corporations led this activity by selling securities worth $329.21m while Overseas Pakistanis bought securities worth $27.83m.

The local investors remained net buyers, purchasing equities worth $304.37m.

Among them, Mutual Funds, Companies and Individuals bought securities worth $232.94m, $94.46m, and $68.01m, respectively. However, Banks/DFIs, Insurance Companies, and Brokers sold securities worth $55.05m, $21.17m and $17.6m.

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