Pakistan Stock Exchange Rebounds After Bloodbath

Pakistan Stock Exchange Rebounds

Staff Report

Islamabad: Pakistan market witnessed a historic day today on May 12, 2025, with the benchmark KSE 100 index rising by 9.45% in a single day, the highest rise after 26 years.

As per Bloomberg, the KSE-100 index is the 3rd best performing market in the last 12 months in the world. Market capitalization rose from Rs12.9trn (US$45.8bn) to Rs14trn (US$49.8bn), an increase of 8.7% DoD,” Topline said.

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The unwavering optimism was led by an immediate/surprise ceasefire announced between Pakistan and India with mediation from the United States of America (USA) on Saturday, May 10, 2025. Along with this, approval of the first review of EFF program by IMF, unlocking US$1bn tranche also boosted investors sentiments.

Amidst Indo-Pak turmoil starting from Apr 22, 2025 incident in Pahalgam, Kashmir, the market lost 12.5% in the subsequent 12 sessions before recovering 3.5% on May 09, 2025.

The abovementioned geopolitical tensions also clouded various positive developments of Pakistan market and economy including all time low inflation reading of Apr 2025 at 0.3% YoY, scheduling of Pakistan’s first review of EFF on IMF board meeting agenda for May 09, 2025 and a surprise cut of 100bps in policy rate to 11% by central bank of Pakistan.

Stock market halted for an hour within 5 minutes of its opening as the Index opened 9.26% positive. Based on the exchange rule, trading will halt for an hour if KSE30 moves 5% in either direction and remains in that territory for five consecutive minutes.

In total, 403 stocks closed in positive territory, out of which 279 stocks closed on their upper circuit range of 10% or +Rs1, whichever is higher.

The market witnessed a trading value of Rs30.4bn in the ready market, up 5.3% higher the previous day. Surprisingly, at the upper circuit, investor bids totaled Rs13bn in both ready and future markets, with the majority of interest seen in PPL, MLCF, and PSO, attracting bids worth Rs2.2bn, Rs1.4bn, and Rs0.9bn respectively in both ready and future markets.

According to our channel checks, local individual investors who had been net sellers in the recent past were aggressive buyers during the session directly and through local mutual funds,” Topline said.

Eurobonds Rally: Pakistan’s dollar bonds maturing in 2025 and 2026 increased by 1.2% and 2.0%, respectively. Similarly, yields on the 2025 and 2026 bonds have decreased to 9.93% and 10.19%, down from 13.27% and 12.56% on Friday.

Local bonds also posted a positive trend, with the 3-year bond yield falling by 8bps, while the 5-year yield also declined by 15bps.

Market Outlook: In our annual strategy released in November 2024, we mentioned that approval of the first review of the IMF in Mar 2025 would be a key trigger in the re-rating of the market multiple to the historic average. Currently market is trading at a 2026E PE of 5.2x, 26% lower than the historic forward PE of 7x. We maintain our base case Index Target of 127,000 for Dec 2025. However, with higher liquidity, the index can cross the 150,000 mark, assuming successful IMF reviews and political/geo-political stability.

After the announcement of a ceasefire between Pakistan and India, the Pakistan Stock Exchange (PSX) has rebounded after a bloodbath and crossed 11000 points. All the previous records of market gains were shattered, signaling renewed investor confidence and economic optimism.

The bulls came stampeding into the Pakistan Stock Exchange, torching the gloom with a historic 9.45% rally — the biggest single-day surge the KSE-100 has ever witnessed. The benchmark index rocketed to an intraday high of 10,153 points, before cooling slightly to close at a blazing 117,297, soaring 10,123 points as investor sentiment did a full 180 — flipping from panic to power in just a few days.

The explosive rally was so intense that trading was temporarily halted just moments after the opening bell, as the KSE-30 Index surged over 5% for five straight minutes, triggering the market’s circuit breaker mechanism. The one-hour pause did little to cool investor enthusiasm — if anything, it added fuel to the fire.

After a week of market gloom driven by regional unrest, a surprise ceasefire breakthrough and a multi-billion-dollar IMF adrenaline shot served up a cocktail of catalysts that set the market ablaze. With diplomacy smoothing nerves and dollars flowing in, the PSX didn’t just bounce — it roared back to life, kicking off the week with a blaze of renewed confidence.

The largest surge on the benchmark index came from FFC, UBL, ENGROH, MARI, and LUCK, which collectively eroded 3,003 points from the KSE-100.

Total traded volume stood at 729 million shares, with a traded value of PKR 30.31 billion. KEL led the volume chart with 113.5 million shares traded.

According to PSX data, the benchmark KSE-100 Index remained bullish by 9,929 points, reaching an unprecedented level of 117,174 points. The surge was so dramatic that within just the first two minutes of trading, the market had to be temporarily suspended for an hour.

As per PSX regulations, trading is halted when the KSE-30 Index rises by more than 5% within a short span. This threshold was crossed at 9:37 AM, prompting the suspension. Trading resumed at 10:42 AM, and the bullish trend continued. By then, the KSE-100 Index had added another 9,475 points, reaching a level of 116,650.

In a media briefing at the PSX, prominent businessman Arif Habib addressed the situation. He stated that India had falsely blamed Pakistan for the Pahalgam incident and highlighted the misconception that India was emerging as a regional superpower. “The world now clearly sees the strength of Pakistan’s armed forces and its people,” he said, adding that India had misled even its own citizens.

Habib expressed that Pakistan had emerged with significant positive momentum, and the capabilities of its military had sent a clear message globally. He emphasized that a large portion of the Muslim world places its trust in Pakistan, and recent developments have renewed their belief in the nation.

He further stated that Pakistan had skillfully and successfully hit military targets, which led to widespread criticism and embarrassment for India on the global stage. “A wave of good news has followed in Pakistan, and the nation stands united,” he added.

Discussing economic developments, Habib revealed that the Prime Minister had held a budget-related meeting and hinted at offering relief to both the industrial sector and salaried individuals. “The world has now seen that Pakistan is a strong and stable country,” he said. He also pointed out that China had given a clear message of support to Pakistan.

Habib acknowledged that several sectors in Pakistan remain underutilized and stressed that the benefits of economic recovery must reach the common man. He indicated that the International Monetary Fund (IMF) now holds a slightly more positive view of Pakistan’s economy, and that signs of improvement may become visible in the upcoming national budget. “The confidence of friendly countries in Pakistan has grown,” he added.

He also noted a reduction in interest rates, which have now come down to 11%, making dollar-based investments less attractive. He observed that while the real estate sector is currently not very active, equity investment is a better option, as it is accessible to investors at all levels.

According to Habib, the priority now should be to achieve macroeconomic stability. “This is the right time to initiate a dialogue on a Charter of Economy,” he said. “Most political parties in Pakistan follow similar economic policies, and they all recognize the private sector as the engine of growth.”

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