Pakistan Stock Exchange (PSX) is set to outperform other asset classes in 2026, driven by improving macroeconomic stability, easing inflation, and healthy domestic liquidity, according to Arif Habib Limited’s (AHL) Pakistan Investment Strategy 2026: The Equity Edge Continues. The report projects the KSE-100 Index to rise by 21.6%, significantly outperforming gold (5.15%), silver (7.89%), and T-Bills (10.05%). AHL has set a December 2026 target of 208,000 points for the index, based on price-to-earnings analysis and target price mapping.
The report highlights a supportive economic environment, including single-digit inflation, a stable currency, improving foreign reserves, and a manageable current account deficit. With policy rates expected to ease gradually, equities are increasingly attractive compared to fixed-income instruments, bank deposits, or USD holdings. Corporate earnings growth is projected at 5.9%, but market valuations remain compelling, with the KSE-100’s forward P/E at 8.0x.
AHL also noted a surge in mergers, acquisitions, and IPO activity, with 10–12 offerings expected across multiple sectors, raising Rs20–25 billion. Structural reforms, including PIA privatisation and power-sector restructuring, are expected to further strengthen market confidence. However, risks remain, including IMF programme execution, global geopolitical developments, and external vulnerabilities that could affect investor sentiment and asset performance.
Equities are projected to remain the preferred growth option in 2026 amid these supportive fundamentals.
