Karachi, December 31, 2025 – Pakistan Stock Exchange’s (PSX) benchmark KSE-100 index recorded an impressive 51% growth in 2025 compared to the previous year, according to market analysts.
The surge marks a continuation of strong performance, bringing the cumulative two-year return to 179%. In US dollar terms, the market posted a 50% return over 2025, with two-year returns standing at 180%, inclusive of dividends.
Analysts at Topline Securities Limited noted that the bulk of the return—around 40%—was driven by re-rating of the index, as the price-to-earnings (PE) ratio climbed from 4.1x in December 2024 to 7.1x in December 2025. Dividend yields during the year averaged 8%, contributing to total investor returns.
The sustained upward momentum was supported by a combination of political stability, economic improvement, lower interest rates, and a stable Pakistani rupee (PKR). Key factors driving the KSE-100 index re-rating included:
1. Successful IMF reviews throughout 2025
2. Credit rating upgrades by global agencies S&P, Moody’s, and Fitch
3. Reduction in interest rates by 250 basis points
4. Improved macroeconomic indicators
5. Strategic KSA-Pakistan defense pact
6. Privatization of Pakistan International Airlines (PIA)
The market faced brief periods of volatility, including the Pakistan-India conflict in May 2025, which temporarily caused a 5.6% drop in three sessions. The market rebounded sharply following successful US-led mediation. Other volatility triggers included the Iran-Israel war and US-imposed tariffs on global economies, including Pakistan.
PSX’s market capitalization rose 36% in 2025 to US$70 billion, though it remains below the 2017 peak of US$100 billion. Trading activity surged to record levels, with average daily volumes in the cash market up 40% to 797 million shares, and average daily traded value rising 64% to Rs37 billion. The futures market also recorded growth, with daily volume and value up 35% and 76%, respectively.
Bloomberg data ranked Pakistan’s KSE-100 among the top five performing markets in the Asia-Pacific region in US dollar terms for 2025. Among major asset classes in Pakistan, the KSE-100 was the second-best performer, with gold leading at a 73% return.
The bourse also maintained momentum in corporate offerings, witnessing seven offerings, including two GEM Board listings and one migration, raising Rs4.3 billion from investors during 2025, compared to Rs8.4 billion previously.