The KSE-100 surged to 174,054 points in CY25

The KSE-100 surged to 174,054 points in CY25, delivering a robust 51% YoY return, according to a report by AHL Research. Among frontier markets, the KSE-100 has emerged as the second-best performing index in USD terms this year.

The index posted double-digit growth for the third consecutive year: 55% in CY23, 84% in CY24, and 52% in CY25, resulting in a three-year average return of 64%.

On a cumulative basis, the index delivered a 249% return over the last three years, the highest among global markets over this period.

Key drivers of this strong rally included improving macroeconomic conditions, enhanced liquidity, and sustained corporate fundamentals.

Earnings growth remained decent, with full-year profits expected to post double-digit growth of around 10–11% (9MCY25 profitability: 13.6% YoY).

Delivering robust gains, the KSE-100 stood out as the preferred investment avenue, outperforming real estate (17%), PIBs and T-Bills (12% each), Defence Savings Certificates (11%), and bank deposits (9%), while gold posted higher returns at 65%.

The year also witnessed 7 IPOs & key M&A activity, including PTCL–Telenor, Engro’s acquisition of Deodar Towers, and ownership stake sales in LOTCHEM and Mitchells.

Further reinforcing the bull run was continued monetary easing, as the SBP cut the policy rate by 250bps to 10.5% in CY25, underpinned by a sustained single-digit inflation environment.

Progress under the IMF programme included the approval of the EFF 1st & 2nd reviews and the RSF first review, resulting in total disbursements of USD 3.3bn.

External credit perception improved as Moody’s upgraded Pakistan to Caa1, while Fitch and S&P raised ratings to B- from CCC+, citing stronger external buffers, fiscal consolidation, and steady IMF-led reforms.