The Pakistan Stock Exchange (PSX) has achieved a landmark performance, with its benchmark KSE-100 Index delivering the highest three-year and five-year US dollar returns among 14 major regional and emerging-market indices, according to data compiled by the exchange. The index posted a compound annual growth rate (CAGR) of 67.48% in dollar terms over three years and 17.17% over five years, the strongest in the comparison set. This performance underscores the depth of the rally that has powered local equities since 2023, driven by macroeconomic stabilization and improved investor confidence.
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On a one-year basis, the KSE-100 returned 46.40% in dollar terms, placing it third behind South Korea’s KOSPI (141.22%) and Thailand’s SET Index (49.26%). The index’s one-year return outpaced both the MSCI Emerging Markets Index (44.18%) and the MSCI Frontier Markets Index (35.39%), as well as regional peers including Singapore’s FTSE Straits Times (33.95%), Japan’s TOPIX (26.93%), and China’s Shanghai SE Composite (25.50%). The outperformance is more pronounced over longer horizons typically used by institutional allocators, with Pakistan’s three-year CAGR more than double the next-best index in the sample, Sri Lanka’s CSE All Share, which returned 30.81% over the same period.
The comparison, published by the PSX, captures a period that includes Pakistan’s disinflation cycle, a reduction in the State Bank of Pakistan’s policy rate from its 2023 peak, and improved external account metrics following the completion of successive IMF review cycles. These factors have supported foreign and local investor appetite for PSX-listed equities. The rally is generally attributed to a combination of macro stabilization, undemanding valuations relative to regional peers at the start of the run, and improved corporate earnings in cyclical sectors such as banking, cement, and energy. The KSE-100’s dollar-return outperformance also reflects currency stability over the review period, in contrast to markets such as Indonesia and India, where local-currency gains were partly offset by currency depreciation against the dollar.
The KSE-100 Index surged by 54,674 points, or 43.52%, during FY26, settling at a record 180,301.70 points, extending the PSX’s winning streak to three consecutive years. This translates to a cumulative return of 335% in PKR terms and 347% in USD terms over FY24-FY26. The rally was supported by rating upgrades, prudent monetary and fiscal measures, and Pakistan’s successful return to international capital markets with a US$750 million Eurobond and a US$250 million Panda bond. Total PSX market capitalization stood at approximately Rs20.198 trillion at FY26’s close, a year-on-year increase of roughly 32.6% in PKR terms.
