Reasons of high stock market performance in Pakistan

Stock market in Pakistan is highly volatile, sensitive and reactive to unanticipated shocks and news. But in recent years Stock Exchange has broken its all-time records, and become the second best performing market on the planet. Pakistan recently went from Frontier market status to emerging market status. This will attract more foreign investment of more than $500 million in value.

Reasons: The first and foremost reason is the investor moratorium applied by the Securities and Exchange Commission of Pakistan (SECP), in collaboration with the KSE, it allows foreign investors to bring investments to Pakistan with no questions asked about the money’s origin and sources. The passing of the amnesty not only brought foreign investment into KSE but also encouraged local investors. This doubled the average traded volume on the KSE.

China has announced investment of $46-billion to build a China-Pakistan Economic Corridor, it also boost trade in Pakistan.

Inflation in Pakistan has dropped below 3%, the government’s budget deficit has seen a commendable easing from 8% to 5% of the GDP, and current account deficit is now at 1% of the GDP. It builds the investor’s confidence on Pakistan’s economy.

Herd behavior (individual investors following the majority). There is upward trend in Pakistan stock market prices so people star investing in stock markets.

Dividend payouts and yields are above historical average, investors find the market attractive and bullish behavior results.