Pakistan’s stock market has caught the attention of some of the world’s biggest asset managers following a historic 84 percent growth in 2024, making it the best-performing stock market globally. This renewed interest is a strong signal of confidence in the country’s economic recovery and investment potential, according to a recent Bloomberg report.
Global investment giants such as BlackRock Inc. and Eaton Vance Corp. have made a comeback in Pakistan Stock Exchange (PSX), either reentering the market or increasing their capital and resources. Frontiers Investment Trust of BlackRock, which had no exposure to Pakistani stocks for almost two years, allocated nearly 5 percent of its portfolio to Pakistan in December 2024. Similarly, Eaton Vance reentered the market in mid-2024, while Legal & General Investment Management Limited and Evli Fund Management organization have also expanded their holdings.
This shift in sentiment follows projections by Intermarket Securities Ltd, which forecasts a 40 percent gain for the KSE-100 Index in 2025. Experts believe that strong earnings growth among Pakistani organizations is a key driver behind this optimism. A portfolio manager at Morgan Stanley Investment Management Inc. emphasized that earnings resilience and the market under scrutiny are the major reasons for international investors to tap into PSX’s potential.
Read more: Bullish momentum continues as PSX reaches highest ever 68,000-point mark
Challenges and Risks
Political uncertainty is still a major concern despite the bullish outlook. Investors are closely watching Pakistan’s political landscape and economic policies, as stability is crucial for maintaining confidence. Moreover, in September 2024, Pakistan was downgraded to frontier market status by FTSE Russell, which triggered net foreign selling in late 2024.
However, fund managers are optimistic. They believe that if Pakistan can effectively manage its current account deficit and execute consistent economic reforms, the stock market may encounter a multi-year rally.
What This Means for Pakistan
The major international investors have rekindled their interest which is a positive sign for Pakistan’s economy. Increased foreign investment could lead to:
• Higher liquidity and market depth in PSX
• Increased investor confidence in Pakistan’s financial stability
• Stronger economic growth driven by capital inflows