PSX eyes 32% growth by Dec 2024

Taking cues from political stability and economic turnaround, the Pakistan Stock Exchange (PSX) is projected to grow by 32% over the next 13-months, reaching 81,000 points in December 2024.
In its annual report titled ‘Pakistan Strategy 2024 – Targeting 81,000; Resilience and Redefined,’ Arif Habib Limited stated that robust earnings growth reported by companies listed on the PSX, enticing stock valuations, substantial domestic liquidity for stock purchases, and comparatively steady economic growth would fuel the rally in 2024.
“Economic headwinds are expected to subside. We maintain an optimistic outlook for FY24, supported by conducive domestic macro factors. GDP growth is expected to be 3.3% during FY24 (compared to a contraction of 0.17% in FY23),” the research house said in the comprehensive report on Monday.
It mentioned that the current account deficit (CAD) is expected to be manageable at $1.1% of GDP in FY24. Inflation is estimated to decelerate to 24% in FY24 and 12.8% in FY25. The State Bank of Pakistan (SBP) is expected to cut its key policy rate by seven percentage points in 2024, reaching 15% by December 2024. Administrative steps and improved external flows would stabilise the Pakistani rupee.
The potential trajectory of economic indicators would support the stock market’s upward momentum.
Recalling that the PSX benchmark KSE 100-Index staged the fastest rally in the past 20 years, increasing 55% in the past five months to a new all-time high above 62,000 points at 62,493 points on Monday, AHL said, “Even with a notable 45% return during the calendar year 2023 to date, the KSE100 index remains significantly undervalued across various valuation perspectives. On a P/E (price-to-earnings ratio) basis, the KSE100 index trades at 4.2 multiples, offering a 29% discount to the last 5-year average of 5.9 multiples.”
The KSE-100 Index is trading at a market capitalisation (value of all shares) to GDP of 8.8%, a discount of 26% compared to the last 5-year average.

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