Several times this year, we have heard that the Pakistan Stock Exchange (PSX) has hit an all-time high, so much so that many have declared it Asia’s best-performing stock market. For some, this may be enough to warrant a hefty investment, but we understand that in order to truly ascertain how secure any investment is, one must understand what’s driving the ups and downs.
Key Economic Drivers
Crossing the symbolic 91,000-point mark, the PSX’s rise is more than just a number— it results from several interwoven economic factors that are reshaping investor sentiment:
Inflation Control: Inflation, which peaked at 38% in early 2024, has declined sharply due to proactive measures by the State Bank of Pakistan (SBP) and government-led fiscal policies, now standing at nearly single-digit levels. This stabilisation has bolstered consumer spending and corporate revenues in sectors like banking, cement, and energy—key players on the PSX.
Interest Rate Reductions: As inflation has dropped (to the point that it hit a three-year low), the SBP cut interest rates from 22% to 17.5%, encouraging both consumer and business borrowing.
Foreign Investment Surge: Foreign capital inflows reached $87 million, the highest in over a decade. Driven by Pakistan’s relatively low market valuations and the appeal of emerging markets, international investors have poured funds into the PSX.
Is It Safe to Invest?
No investment is foolproof, but when it comes to Pakistan, there’s plenty to bet on. Consistently bullish trends are hard proof of a sustained economic trajectory, but for those who want to know the ins and outs of their investment, here’s why we believe that these developments are so much more than a “trend”:
Rising Corporate Earnings: Decreased inflation and borrowing costs are driving profitability for major sectors on the PSX, from energy and manufacturing to real estate. As corporate revenues increase, the demand for commercial properties and luxury living spaces is expected to grow, offering high-yield opportunities for investors in both equities and real estate.
Supportive Policy Environment: The government’s success and structural reforms in taxation and transparency have bolstered confidence among investors. These measures, which reflect a commitment to economic stability, make Pakistan an attractive destination for overseas investment.
Real Estate Synergies: According to the latest Savills report, Pakistan’s residential real estate sector is projected to grow by 24% over the next five years, with rental yields in upscale developments reaching prime levels. Savills also highlighted the resilience of Pakistan’s commercial real estate, with Grade A office occupancy at 90%. As demand for rental properties grows, real estate investment becomes a pathway for generating reliable passive income.
Why One Homes Invested in Pakistan’s Future
At One Homes, our investment strategy has always been rooted in Pakistan’s potential for economic growth and development. For those looking to build a legacy or explore overseas investment opportunities, now is an ideal time to consider Pakistan’s upward economic journey.
With economic fundamentals aligned and an increasingly favourable environment for long-term investments, Pakistan is a compelling choice for those looking to build both wealth and a lasting connection to their heritage.
