KSE-100 Index is headed for best year in 21 years

November 22, 2024 (MLN): Pakistan's benchmark stock index has surged by most in over two decades in 2024 on signs of improvement in the nation’s economy under the International Monetary Fund loan program, declining interest rates, and a stable rupee.

The KSE-100 Index has advanced 58.9% in US Dollar terms to 97,798 this year and is on track to post its biggest annual gain since 2003. It is also the second-best performing market in 2024 among more than 80 global equity indexes tracked by MG Link.

Despite the stock market's record-breaking rally, the gauge is still traded at 5.8 times future earnings, a multiple that’s 29% lower than its 10-year historical average.

The rally has been aided by mutual funds’ net purchases of $136.5 million in Pakistani stocks, the highest since 2017, according to data compiled by MG Research.

Mutual funds are piling into local shares at a record pace on signs of improvement in the nation’s economy, declining interest rates, and a stable rupee.

Pakistan’s economy has stabilized with inflation easing significantly from a record 38% in May 2023 to 7.2% in October. That has allowed the central bank to reduce interest rates by 700bps since June in four consecutive cuts.

Consumer price gains are expected to ease further to below 5% in November, according to MG Research calculations

Top Index Movers

Sector-wise, top positive contributors are Commercial Banks (+11,395pts), Fertilizer (+8,794pts), Oil & Gas Exploration Companies (+5,933pts), Cement (+2,343pts), and Pharmaceuticals (+1,719pts).

Contrary to that, negative contributions have come from Textile Composite (-119pts), Textile Spinning (-11pts), Synthetic & Rayon (-7pts), Leasing Companies (-2pts), and Vanaspati & Allied Industries (-1pts).

The best-performing stocks during the year are FFC (+5,123pts), UBL (+3,155pts), EFERT (+2,143pts), MARI (+1,950pts), and OGDC (+1,925pts).

Whereas, the worst-performing are TRG (-245pts), NESTLE (-96pts), NRL (-74pts), EPCL (-63pts), and PSEL (-48pts).

Portfolio Investments

Foreign investors have been net sellers during the year, dumping a significant $69.9m worth of equities.

Their most substantial sales activity is in Fertilizer stocks at $33.6m, followed by Oil and Gas Exploration Companies at $26.3m.

Flow-wise, Mutual funds are the dominant buyers, with a net investment of $136.5m.

They have allocated the majority of their capital, $29.2m to Fertilizer, followed by Oil and Gas Marketing Companies at $25.6m, and Cement at $23.4m

On the other hand, the leading sellers are Banks / Dfi, with a net sale of $86.2m. Their most substantial sales activity is in Fertilizer, amounting to $34.6m.

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