Mutual Funds Behind Historic PSX Rally As Investors Shift from Fixed Income to Equities

Pakistan’s market has returned 35 percent in both rupee and US dollar terms due to strong net inflows via local mutual funds since September 2024 to date. According to Topline Securities, this significant return is driven by aggressive net buying from mutual funds to the extent of US$ 207 million (Rs. 58 billion) during the same period on the back of conversion from fixed income to equities. In Friday’s note on the stock market’s performance, Topline said funds/investors are converting from fixed income to equities as yields on fixed income instruments have fallen by 1,253-1,261bps from the peak of 24.73 percent and 24.51 percent on 12M and 6M Treasury Bills in September 2023 to 12.20 percent and 11.9 percent on December 19, 2024. It bears mentioning that PSX ended the week in positive after back-to-back sell-off sessions which saw its benchmark KSE-100 index lose over 8,500 points on Wednesday and Thursday. KSE-100 index gained 3,238 points to close at 109,513 points on Friday, up 2.96 percent over the previous closing.