Karachi, January 4, 2025 – The Pakistan Stock Exchange (PSX) is anticipated to extend its record-breaking performance in the upcoming week starting January 6, 2025, according to analysts at Arif Habib Limited.
The analysts believe the “January effect” will remain a key driver, with market participants focusing on stocks that promise robust earnings and substantial dividend potential.
The benchmark KSE-100 index of the PSX is currently trading at a price-to-earnings ratio (PER) of 6.4x for 2025, significantly lower than its 10-year average of 8.2x. This offers an attractive dividend yield of approximately 7.6%, surpassing the 10-year average of 6.5%. Such metrics highlight the PSX’s value proposition for both domestic and international investors.
During the past week, the PSX experienced unparalleled growth, with the KSE-100 index closing at an all-time high of 117,587 points. This surge was fueled by New Year optimism and the government’s unveiling of the “Urran Pakistan Programme,” a five-year economic growth plan aimed at achieving sustainable development. On the macroeconomic front, inflation in December 2024 dropped to an 80-month low of 4.1%, the lowest since April 2018. Additionally, GDP growth for the first quarter of FY25 was reported at 0.92%, driven by 1.15% growth in agriculture and 1.43% in the services sector.
Despite these positive developments, challenges remain. The trade deficit widened by 35% year-over-year (47% month-over-month) in December 2024, and cement sales fell by 4.76% year-over-year to 3.37 million tons. Meanwhile, the State Bank of Pakistan’s reserves declined by USD 143 million, closing at USD 11.7 billion.
Sector-wise, the PSX’s performance saw positive contributions from fertilizers (1,439 points), banks (560 points), investment companies (221 points), automobile assemblers (214 points), and power (82 points). On the flip side, sectors like cement, exploration and production, and oil marketing companies posted negative contributions. Key positive scrips included EFERT, FFC, MTL, DAWH, and HBL, while MCB, FCCL, PSO, KOHC, and SYS weighed negatively on the index.
Foreign investment trends were encouraging, with a net buying of USD 0.9 million compared to a net sell of USD 6.8 million the previous week. The PSX witnessed robust activity, with average daily trading volumes rising by 31% week-over-week to 1,044 million shares, and the average daily traded value increasing by 1% to USD 156 million.
The PSX continues to position itself as a lucrative market, demonstrating resilience and growth potential despite macroeconomic challenges.