PSX Performance Over the Last 5 Years: A Year-by-Year Review

Few emerging markets have delivered a five-year stretch as eventful as the Pakistan Stock Exchange’s run from 2021 through 2025. The KSE-100 Index moved from a period of stagnation and sharp decline to what analysts have called one of the strongest rallies in the exchange’s history. Here’s a year-by-year look at how the index performed and what drove each move.

KSE-100 Year-End Closing Levels (2021–2025)

Year	KSE-100 Close	Change
2021	44,596 points	+1.9%
2022	40,420 points	-9.4%
2023	62,451 points	+54.5%
2024	115,127 points	+84.3%
2025	174,054 points	+51.2%

Over this five-year span, the index roughly quadrupled in value. Put another way, an investor who had stayed invested in a KSE-100 tracking instrument from the start of 2021 through the end of 2025 would have seen their capital grow nearly fourfold in index terms, before accounting for dividends, fees, or currency effects.

2021: A Flat Year Despite Record Activity

2021 was, by most accounts, a disappointing year relative to its record trading volumes and IPO activity. The index closed up just under 2% in rupee terms, underperforming regional peers and actually posting a negative return of roughly 8% when measured in US dollar terms, reflecting rupee depreciation during the year. The index had peaked near 48,700 points in June 2021 before drifting lower in the second half, weighed down by mounting current account and inflation concerns. Technology and textile spinning stood out as the year’s best-performing sectors.

2022: Political and Economic Stress Take Their Toll

2022 proved to be one of the more difficult years for Pakistani equities, with the KSE-100 falling roughly 9% and overall market capitalization declining by around 17%. The year was marked by a change in government following a no-confidence vote, a severe balance-of-payments crisis, rupee depreciation, and uncertainty around Pakistan’s IMF program. Engineering, automobile parts, and several import-dependent sectors were among the hardest hit, while real estate investment trusts, sugar, and synthetic and rayon stocks managed to post gains despite the broader downturn.

2023: The Turnaround Begins

2023 marked a sharp reversal, with the index surging 54.5% for the year. This recovery was closely tied to the finalization of Pakistan’s Stand-By Arrangement with the IMF, which helped stabilize the currency and restore a degree of investor confidence after the acute crisis conditions of the prior year. Banking, energy, and export-oriented sectors were among the key contributors as sentiment improved through the second half of the year.

2024: The Best Year Since 2002

2024 was, by multiple measures, a historic year for PSX. The KSE-100 gained 84.3%, marking its best calendar-year performance since 2002 and positioning Pakistan as the second-best performing stock market globally that year, trailing only Argentina. The rally was underpinned by a sustained decline in interest rates, improving macroeconomic stability, and continued progress on the IMF program. Over an 18-month stretch spanning parts of 2023 and 2024, PSX was reported to be the best-performing market in the world, delivering a cumulative gain of around 178%, described as the strongest performance in Pakistan’s stock market history over such a timeframe.

2025: Records Continued to Fall

The rally carried into 2025, with the index starting the year above 117,000 points and closing above 174,000 points, touching a historic intraday high near 175,232 points on the final trading day of the year. Commercial banks remained the standout sector throughout 2025, supported by strong net interest income growth and a broader valuation catch-up, while oil and gas, fertilizer, cement, and energy sectors also contributed meaningfully. Despite the scale of the rally, analysts at the time noted the market was still trading at a price-to-earnings ratio below its long-term historical average, suggesting valuations had not necessarily become stretched relative to history even after such a strong multi-year run.

2026 So Far: Volatility Returns

The rally did not move in a straight line into 2026. On 2 March 2026 the KSE-100 fell about 9.57% in a single session, one of the sharpest one-day drops in its history, and by early October 2026 the index was trading around 167,000 points, below its end-2025 close of 174,054. The detail is covered in PSX vs NYSE: 2023 to 2026. The lesson is the same as in earlier years: strong multi-year returns come with large drawdowns.

Market settlement also changed in 2026: PSX moved to T+1 settlement from 9 February 2026. For how to read index moves, see KSE-100 Index Explained.

What Drove the Broader Turnaround

Looking across the full five-year period, a few consistent themes explain the shift from stagnation to rally:

• Interest Rate Cycle: A steady decline in interest rates from their peak made equities comparatively more attractive versus fixed income, and reduced borrowing costs for listed companies.
• IMF Program Stability: Successive IMF arrangements helped anchor macroeconomic expectations and reduce the risk of a disorderly currency or balance-of-payments crisis.
• Low Starting Valuations: Much of the 2023–2025 rally followed a period where PSX traded at historically low price-to-earnings multiples, leaving more room for re-rating as sentiment improved.
• Sector Rotation: Banking, cement, fertilizer, and energy consistently appeared among the top-contributing sectors across the recovery years, reflecting their large weight in the index and sensitivity to the macro improvements described above.

What This Means for Investors

A few lessons stand out from this five-year stretch:

• Volatility Cuts Both Ways: The same market that fell nearly 9% in 2022 gained over 84% just two years later, underscoring how dramatically sentiment and macro conditions can shift emerging markets like PSX.
• Staying Invested Through Weak Years Mattered: Investors who exited during the difficult 2021–2022 period would have missed the bulk of the subsequent recovery.
• Past Returns Don’t Guarantee Future Ones: A four-year run of this magnitude is unusual by historical standards, and analysts frequently caution that future returns are unlikely to replicate this exact pattern indefinitely.

Final Thoughts

The 2021–2025 period captures both the risk and the reward that come with investing in a frontier market like Pakistan’s. A deep downturn tied to political and economic stress was followed by one of the strongest multi-year rallies in the exchange’s history, driven by falling interest rates, IMF-anchored stability, and a re-rating from historically low valuations. For long-term investors, this stretch is a reminder that staying the course through difficult years can matter as much as timing any single year’s entry point — though, as always, past performance is not a guarantee of how the next five years will unfold.

New to the market? Start with the PSX beginners guide, and check how dividends and taxes affect your actual return in capital gains tax on PSX stocks.

Sources

• Pakistan Stock Exchange market data and KSE-100 historical levels: psx.com.pk
• Contemporary market coverage from Dawn, Business Recorder and Profit for each year’s performance and the 2 March 2026 fall

Index levels are rounded and rupee-based, exclude dividends and fees, and are for education only, not investment advice.