Arif Habib Limited now expects KSE-100 to hit 109,000 by June 2025

Propelled by optimism over inking a “new longer and larger” programme with the International Monetary Fund (IMF) and improved economic indicators, the Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index is expected to hit 109,000 by June 2025, according to a ‘strategy’ paper by brokerage house Arif Habib Limited (AHL).

As per AHL’s report ‘Pakistan Strategy FY2025: Into the century zone’ released on Thursday, the KSE-100 is expected to close at 109,250 points by June 2025, offering a return of 36% in FY25.

Arif Habib Limited expects KSE-100 to hit 81,000 by December 2024

“The index is buoyed by the potential negotiation of the IMF’s Extended Fund Facility (EFF) programme, a downward trend in the policy rate, and a shift in investments from fixed income to equities; all expected to lead to re-rating of the index,” said the brokerage house.

The PSX has been on a buying spree in recent weeks, with the benchmark KSE-100 closing at a record high of 80,282.80, an increase of 49.13 points or 0.06% on Thursday.

The index has rallied over 10% since the budget was presented on June 12, helped by continued optimism on getting an IMF bailout package to bolster the struggling South Asian country economy.

“The local bourse is expected to garner further attention in FY25 as KSE-100 Index remained the world’s best performing market with a solid return of 94% in FY24,” said AHL.

“Also, KSE100 is the second most liquid market in the MSCI Frontier Markets (FM) space, with an average daily trading value (ADTV) of USD 55mn in FY24. Furthermore, the index ranks as one of the cheapest market in terms of price-to-earnings (P/E) ratio of 4.2x compared to regional market average of 12.1x, while also being attractive in terms of price-to-book (P/B) ratio of 0.8x vis-à-vis regional P/B average of 1.6x,” it added.

In its report, AHL expected Pakistan’s GDP to grow by 3.2% in FY25 as compared to 2.38% in FY24, on the back of improved agriculture yields, recoveries in industrial output and services sector growth.

The brokerage house said Pakistan is anticipated to enter a new three/four years EFF with the IMF, likely amounting to $6-8 billion, “which would support balance of payment for next 3 years”.

Pakistan began discussions about a new loan with IMF officials soon after completing a $3-billion Stand-By Arrangement (SBA) in April.

The international lending agency sent its delegation to Pakistan in May to hold negotiations with the new government.