The KSE-100, the benchmark index of the Pakistan Stock Exchange (PSX), is expected to continue its upward trajectory in calendar year 2025 (CY25), with an expected return of 55.5% (49% in USD), driven by lower interest rates and improving macroeconomic stability. , according to a report by AKD Securities.
The index is expected to reach 165,215 points by December 2025, representing a strong performance after the significant gains it achieved over the past two years.
AKD Securities highlighted that the stock exchange benchmark PSX is set to record another year of strong returns, with interest rates expected to fall into the single digits in year 25 due to a strong external account. Lower returns from alternative investments are expected to make stocks a preferred asset class in 2025.
The focus on structural reforms and stringent fiscal and monetary policies under the IMF program is also expected to improve the investment climate and support the market rally.
The report noted that the KSE-100 index outperformed its global peers in 2014, recording its highest return since 2002, with gains of approximately 70% in local currency and 72% in US dollars. Political stability, strong monetary easing by the State Bank of Pakistan and currency stability have contributed to this performance. Globally, the KSE-100 index is ranked as the second best performing market, behind only Argentina.
AKD Securities attributed the rise during the year 24 to strong profitability in key sectors, especially fertilizers, sustainable returns on shares in banks, and improved cash flows for exploration and production companies and oil marketing companies. Investor confidence, which was initially driven by foreign investors and insurance companies in 1H24, was boosted by mutual funds in the latter half of the year.
The report also provided sector forecasts for the year 25, maintaining an overweight position on banks, fertilisers, exploration and production, cement, crude oil companies, automobiles, textiles and technology, as these sectors are expected to benefit from monetary easing and structural reforms.
However, the brokerage recommended a market weight position for the energy sector due to changes in independent power producer (IPP) contracts and an under weight position for chemicals due to lower margins.
AKD Securities has identified its top CY25 stock picks as OGDC, PPL, MCB, MEBL, HBL, FFC, ENGRO, PSO, LUCK, FCCL, INDU, ILP and SYS, citing strong fundamentals and growth potential across these companies.