Retail investors are driving Pakistan’s stock market rally, helping extend a surge that has pushed the benchmark KSE-100 index up about 40 percent in 2025, making it one of Asia’s strongest-performing markets, Bloomberg reported.
The rise comes as individual traders shift toward equities amid declining deposit rates and stagnant property prices. Analysts attribute the momentum to improved government stability and increased liquidity, with many small investors showing renewed confidence in local shares after years of political and economic uncertainty.
Bloomberg quoted Topline Securities’ CEO Mohammed Sohail as saying that the current uptrend is supported by liquidity, noting that market strength is likely to continue unless capital finds alternative investment avenues.
It added that Pakistan’s improving macroeconomic outlook has also contributed to investor optimism. The economy began to stabilise after the 2023 near-default, while S&P Global Ratings and Fitch Ratings upgraded Pakistan this year, citing fiscal consolidation and reforms under the IMF-backed programme of Prime Minister Shehbaz Sharif. Efforts by Field Marshal Asim Munir to strengthen US relations and his extended role until 2030 have further reinforced views of political continuity.
Investor participation has risen sharply. Nearly 36,000 new trading accounts were opened in the September quarter, compared with 23,600 in the previous quarter, according to Topline Securities. Trading volumes have also increased, with daily turnover on the Pakistan Stock Exchange exceeding $200 million in October, the highest since 2017, Bloomberg data shows.
For many retail traders, confidence in equities marks a shift from past skepticism. Foreign investors, however, appear more cautious. Overseas funds have sold a net $308 million worth of Pakistani equities so far in 2025, marking the largest annual outflow since 2018.
Analysts warn that rising inflation, expected to pick up further after an October increase, could delay central bank rate cuts and temper sentiment. Regional geopolitical tensions also remain a potential risk.
Mattias Martinsson, chief investment officer at Tundra Fonder, said Pakistan’s corporate sector has become more financially disciplined in recent years and the central bank more transparent.
He added that future optimism depends on whether the next decade outperforms the last, noting that while gains may continue, they could be “slower and steadier” going forward.
