The Pakistan Stock Exchange (PSX) is where shares of Pakistan’s listed companies are bought and sold. This guide explains how it works, what the KSE-100 index means and how an ordinary person can start investing.
What is the Pakistan Stock Exchange?
The PSX was formed in January 2016 when Pakistan’s three stock exchanges – in Karachi, Lahore and Islamabad – merged into one national exchange. It is headquartered in Karachi. Hundreds of companies are listed on it, including banks, cement makers, oil and gas firms, fertiliser companies and technology businesses.
Who regulates it?
- SECP: the Securities and Exchange Commission of Pakistan regulates the stock market, brokers and listed companies.
- CDC: the Central Depository Company keeps shares in electronic form, so investors do not hold paper certificates.
- NCCPL: the National Clearing Company of Pakistan settles trades, making sure money and shares change hands correctly.
What is the KSE-100 index?
The KSE-100 is the main benchmark of the PSX. It tracks the performance of 100 large listed companies chosen mainly by size, with representation from each sector. When news reports say “the market rose 500 points”, they usually mean the KSE-100 index. Other indices include the KSE-30 (30 large, actively traded companies) and the KMI-30 (30 Shariah-compliant companies).
How to start investing in the PSX
- Choose a licensed broker: pick a brokerage house registered with the SECP and a member of the PSX. Many now offer mobile apps.
- Open an account: you will need your CNIC, a bank account and basic personal details. The broker opens a trading account and a CDC sub-account in your name.
- Deposit money: transfer funds from your bank account to your broker account.
- Buy shares: place an order through the broker’s app or by phone during market hours.
- Track your investment: you will receive confirmations from your broker and statements from the CDC.
Overseas Pakistanis can invest through a Roshan Digital Account, which lets them open a bank account in Pakistan and access the stock market online.
How investors make (or lose) money
- Capital gains: profit from selling a share for more than you paid.
- Dividends: a share of company profits paid to shareholders.
- Losses: share prices can fall as well as rise, and you can lose part or all of your investment.
What moves the stock market?
- Interest rate decisions by the State Bank of Pakistan
- Inflation and the rupee’s exchange rate
- Company profits and dividend announcements
- Political stability and IMF programme news
- Foreign investment flows and global markets
Tips for beginners
- Only invest money you will not need for several years.
- Spread your money across different companies and sectors.
- Avoid tips and rumours on social media; read company results instead.
- Consider mutual funds if you prefer professional management.
This guide is for general information only and is not investment advice. Speak to a licensed financial adviser before investing. Follow NEN Agency’s business news for daily market updates. See also: how Pakistan’s budget works and gold price today.