Investors rush into Pakistan IPOs for quick gains

September 29, 2024 (MLN): A rally in Pakistan stocks has fueled demand for companies pursuing initial public offerings (IPOs). The IPO market is seeing a surge of big listings in 2024 after a two-year dry spell, driven by improving economic conditions.

Four companies have already made their debut on the stock exchange so far this year, raising Rs8 billion via IPOs—a tally that’s higher than the combined amount raised in the past two years, according to data compiled by MG Research.

Investors look eager to deploy capital into these offerings as hefty gains for new stocks have historically outpaced the broader market. For a detailed analysis of stock performance on IPO price since 2011, click here.

However, the return on IPOs this year has, so far, been lackluster. Two out of the three companies that went public are trading below their IPO price, according to the data (the fourth company has not yet started trading).

Shares that began trading this year have delivered an average gain of about 14% since their debut, according to MG Research data. That’s despite a broader market rally this year, with the benchmark KSE-100 Index jumping 30%.

That is also significantly lower than a gain of 95% for firms that went public in 2023 and 2022, and the average return of 57% over the past nine years, according to the data, which studies the main board listing returns, adjusted for payouts.

Disclaimer: The views and analysis in this article are the opinions of the author and are for informational purposes only. It is not intended to be financial or investment advice and should not be the basis for making financial decisions.

The data in this story has been prepared by MG Research. Mettis Global does not guarantee its accuracy or completeness.

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