Pakistan stocks soar: KSE-100 surges 40% — What’s driving the market after years of volatility?

Pakistan’s stock market is experiencing an unusual surge, driven largely by retail investors, signalling renewed confidence in local equities after years of uncertainty.

The KSE-100 Index has soared roughly 40% in 2025, making Pakistan one of Asia’s top-performing markets. With property prices stagnant and deposit rates halved over the past two years, more individuals are turning to shares as an alternative investment, Bloomberg reported.

“We’re now seeing a liquidity-led rally,” said Mohammed Sohail, chief executive officer at Topline Securities Ltd. “Unless that liquidity finds a new avenue, the markets will likely stay strong.”

What resulted in the rare rally

Economic landscape: The market’s momentum coincides with Pakistan’s improving economic landscape. After narrowly avoiding a debt default in 2023, the country received upgrades from S&P Global Ratings and Fitch Ratings this year, reflecting better fiscal management and progress under Prime Minister Shehbaz Sharif’s IMF-backed reforms.

Political situations: Current political and strategic developments have also fueled this sentiment. The country's field marshal Asim Munir, widely regarded as Pakistan’s most powerful leader, has been credited with strengthening US relations. His elevation to a role extending until 2030 is seen as reinforcing stability.

Renewed interest: Investor participation is rising sharply. Nearly 36,000 new trading accounts were opened in the September quarter, up from 23,600 in the previous three months, according to Topline Securities. Trading activity has followed suit, with daily turnover surpassing $200 million in October—the highest since 2017, Bloomberg data show.

Fin-fluencer effect: Financial influencers online also play a role in fueling the interest. One such example is Jawad Khalid Mirza, a 44-year-old chief information security officer who once dismissed the market as gambling that ignored fundamentals. However, after following local “fin-fluencers” on Facebook, he invested in National Foods Ltd., a producer of ketchup and spices he personally uses.

Other investments: Mutual fund investments are also on the rise. By September, 16% of total assets managed by asset management companies were invested in equities, up from 9% at the start of the year, according to the Mutual Funds Association of Pakistan.

Stock market experts, have said that the steadiness will most probably continue for some more time. Mattias Martinsson, chief investment officer at Stockholm-based Tundra Fonder AB, told Bloomberg that ongoing crises have made companies more prudent in financial management, while the central bank has become more transparent.

Nevertheless, inflation poses risks, with Bloomberg Economics predicting a further rise in prices after an unexpected acceleration in October. Geopolitical tensions with India and Afghanistan could also weigh on investor sentiment.

Foreign investors are pulling back, selling a net $308 million in local shares in 2025, their largest annual outflow since 2018.

Martinsson remains cautiously positive saying that in order to be optimistic from here on, "you need to expect that the next 10 years for Pakistan will be better than the last ten."

The expert further added that even more gains could emerge on the way ahead, "but they could be slower and steadier than what we saw in the last few years."


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