• The Pakistan Stock Exchange (PSX) experienced a market-wide trading halt today as the KSE-100 Index skyrocketed by 9,475 points (+8.84%) to close at 116,650.12, triggering the index-based halt mechanism on the upside. The rally was driven by a powerful combination of regional peace prospects, fresh IMF disbursements, and improving global trade sentiment following the resolution of the U.S.-China tariff standoff.

• The Directors General of Military Operations (DGMOs) of both nations met today at 12:00 PM to formalize and reinforce the recently agreed ceasefire.

• The diplomatic engagement is being seen as a major de-escalation step, improving regional security outlook and investor sentiment.

• Following a volatile week marked by heavy sell-off due to escalating border tensions with India, KSE-100 Index appears wellpositioned for a rebound, supported by a series of positive developments. The most notable among these is the ceasefire agreement between Pakistan and India, facilitated by diplomatic intervention from the U.S. and regional partners. This has significantly eased investor concerns, as reflected in today’s market performance, where trading was briefly halted in early minutes. International mediation between the two archrivals is expected to support regional stability and investor confidence.

• Moreover, successful completion of the IMF’s first review under the Extended Fund Facility (EFF), unlocking a US$1bn tranche, along with approval of US$1.4bn under the Resilience and Sustainability Facility (RSF) for climate resilience. These developments are expected to lift market sentiment ahead of the much anticipated FY26 budget, where adherence with IMF guidelines will be critical. To highlight, external position and overall macros have improved substantially over the past year, which may support potential credit rating upgrades by global agencies. Additionally, Pakistan’s position as a net commodity importer makes it a key beneficiary of the current downtrend in global commodity prices.

• We revise our estimated fair value for Dec 2025 to PKR 41/share, reflecting stronger-than-expected value traded, a higher ADTV-to-market cap ratio, a reduction in the discount rate, and a rollover to December 2025. The stock offers a 45% upside from current levels. We maintain our Buy rating.

• PSX operates as a unified national exchange, with over 500 listed companies across 38 sectors and a market capitalization exceeding PKR 14 trillion.

• PSX owns 50% of NCCPL, which manages the clearing, settlement, and risk management functions of the stock market.

PSX Statistical Review 2024 

• Pakistan Market since Sep 2024 to-date has returned 35% in both Rs and US$ terms, thanks to the strong net inflows of Rs58bn (US$207mn) of local mutual funds during the same period mainly due to conversion from fixed income to equities. In this note, we have tried to gauge the expected quantum of further liquidity market can receive due to conversion from fixed income to equities.

• The funds/investors are converting from Fixed income to equities as yields on fixed income instruments have fallen by 1253bps-1261bps from peak of 24.73% and 24.51% on 12M and 6M Treasury Bills in Sep 2023 to 12.20% and 11.9% on Dec 19, 2024.

• Equities will remain the preferred choice for investors: Unlike previous years where investors use to buy dollars, real estate, gold, prize bonds etc. for earning higher returns, we believe, in this cycle equities will get some portion of liquidity due to (1) higher restrictions on purchase of dollars, (2) increase in taxations, compliance and FBR valuation rates of properties, and (3) discontinuation of high denomination unregistered prize bonds.

• The Pakistan Stock Exchange (PSX) continued its record-breaking momentum, with the KSE-100 Index rising by 1,284.13 points (1.24%) to reach 104,559.07, fueled by economic optimism and a sharp decline in inflation. The market’s performance reflects improved macroeconomic conditions and expectations of monetary easing. Key factors driving the rally include a drop in inflation to 4.9%, the lowest in six-and-a-half years, and a narrowing trade deficit, which improved market sentiment. Prime Minister Shehbaz Sharif’s optimism about further interest rate cuts also contributed to the bullish trend. Analysts expect sustained growth, driven by favorable economic policies, stabilizing fundamentals, and a strong market outlook.

• Cement sales in Pakistan rose by 5.58% in November 2024, with total dispatches reaching 4.146 million tons, driven by strong domestic sales and a 21.27% increase in exports. Domestic sales saw a slight rise of 2.39%, while export dispatches surged significantly. North-based mills dispatched 2.925 million tons, with exports up by 16.90%, while South-based mills saw a 15.21% increase in total dispatches, with exports rising 22.48%. For the first five months of the fiscal year, total cement dispatches declined by 5.24%, despite a 28.73% rise in exports. APCMA urged government intervention to reduce duties and taxes to lower consumer costs and stimulate sector growth.

• Pakistan's petroleum product sales rose 15% YoY to 1.58 million tonnes in November FY25, driven by a 17% increase in petrol sales and a 21% rise in high-speed diesel (HSD) sales. However, furnace oil (FO) sales dropped 55% YoY due to lower demand in power generation. The increase in sales was attributed to a crackdown on smuggled fuel and a reduction in petrol and HSD prices. On a MoM basis, sales rose by 6%, with higher HSD demand. In the first five months of FY25, total petroleum sales increased 5% YoY, with petrol and HSD up, while FO dropped. PSO saw a 12% YoY sales increase but a decline in market share, while Shell and HASCOL reported growth. PDL collections also grew.

• Pakistan Stock Exchange has surpassed historic milestone of 100,000 mark, reflecting a 150 percent return in just 16 months from 40,000 to 100,000, analysts said. With this impressive achievement, the PSX is the best performing market globally for calendar year 2024, with a 60 percent return year-to-date, they added.

• Pakistan's foreign exchange reserves received a $500 million boost from the Asian Development Bank (ADB) under its Climate Change and Disaster Resilience Enhancement Programme (CDREP). This inflow, expected to be reflected in the State Bank of Pakistan's reserves by the end of November 2024, offers much-needed stability amid ongoing currency fluctuations. The State Bank of Pakistan (SBP) reported total liquid foreign reserves of $16.07 billion as of November 22, 2024, with $11.4 billion held by the SBP and $4.6 billion by commercial banks. This total will further increase when the ADB inflow is officially reflected in next week's data release.

• The total money supply circulating within the economy till October 2024 has been recorded at Rs39.93 trillion, according to provisional accounts on Monetary Aggregates for the month, maintained by the State Bank of Pakistan (SBP). The money circulating within the economy until September 2024 was Rs39.89tr whereas, in the month of October of last year, the figure was Rs34.91tr. This means that the money supply has risen by 0.11% MoM while, on a year-on-year basis, it has jumped by 14.4% YoY.

• We revise our estimated fair value for Dec 2025 to PKR 41/share, reflecting stronger-than-expected value traded, a higher ADTV-to-market cap ratio, a reduction in the discount rate, and a rollover to December 2025. The stock offers a 45% upside from current levels. We maintain our Buy rating.

• PSX operates as a unified national exchange, with over 500 listed companies across 38 sectors and a market capitalization exceeding PKR 14 trillion.

• PSX owns 50% of NCCPL, which manages the clearing, settlement, and risk management functions of the stock market.