KARACHI: The Pakistan Stock Exchange (PSX) provided investors with a mouth-watering return of 39 per cent at the close of trading for 2020-21.

Comparative average returns were 23pc on average a year and compound annual growth rate (CAGR) at 19pc over the last 20 years, the average of 15pc and CAGR of 11pc over 15 years and average return of 16pc and CAGR of 14pc over 10 years.

Over the past five years, the average yearly return dropped to 7pc and CAGR to 5pc. Three of the last five years have been unkind to the investors with negative returns of 10pc in FY18; 19pc in FY19 and 1.53pc in FY20.

The period was plagued by the misjudgement over entry into the MSCI Emerging Market from Frontier Market in 2017; uncertainty over the economic and political situation and finally the Covid-19 engulfing the world in flames. With the worries and uncertainties settling on most fronts, investors were back to the market in droves, lifting the benchmark KSE-100 index to four-year high.

Mohammad Sohail, CEO at Topline Securities, observed that the rising local liquidity after Covid-19, leveraged market reforms and economic recovery, all combined to bring about positive impact on the stock market in FY21.

He noted that the in FY21, value traded per day (ready and future) averaged at Rs28bn, which represented the highest value traded on a single day in the last 15 years. Improved investor sentiments and volumes helped corporates to do record IPOs and right offerings.

Mr Sohail said that market recovery of 39pc was seen after three bad years. He reckoned: “Although market was trading at attractive PE, but non-stop foreign selling, fate of IMF programme and Afghan situation will remain key market drivers in the coming months”.

Published in Dawn, July 1st, 2021